Monthly Archives: October 2008

My parents live among houses like this...“Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens, a report on Friday shows.”

That’s the opening line in an article on CNBC today.

Read that again.

“Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens, a report on Friday shows.”

I realize that real estate is always “local” and no one thinks that this sort of thing happens in “their” neighborhood, but I’m sorry, that opening line is too outrageous to ignore.

One in five? And soon to be one in four?

No way.

No freakin’ way.

“The data, covering 43 states and Washington, D.C., includes borrowers nationwide, even those who took out mortgages before housing prices began to soar early this decade.”

I call BS.

There is no way.

I bought my house this decade and I’m not in that situation. I’m not even close.

I even could have purchased my house two years ago, when it was near it’s height, and I still wouldn’t be in that situation today. Value is dropping, yes, but not like the stock market did in October…

The only way that opening line could possibly be true is if roughly a quarter of all homes in the country were purchased in the last 18 months and we all know that that isn’t the case.

I look at my street, and again, I know people always say real estate is local, but my street is pretty run of the mill. The most recent home sale was about two years ago now. The one before that was, well, my house — six years ago. Things were pretty affordable six years ago.

The woman across the street — now an AARP member grew up in that very same house. If I had to guess, the average for the street is well over 15 years per house.

Neighborhoods don’t have enough turnaround to justify the numbers quoted — that is unless, of course, if they only collected data in brand new dead end cul-de-sac developments full of McMansions…

Naturally, later in the article they take a HUGE step back from the opening line saying things like, “This is very much a regional problem” and that “most of the country is not in bad shape”…

Um, okay… So what’s up with the opening line?

Shock and awe!

I guess it worked.

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I usually don’t do this stuff, mostly because I feel like I’m usually the last to be tagged but also because I don’t like to brag about myself.

I kid.

New blogger MoneyMate Kate tagged me this morning for the latest, um, “chain post” and, at first, I dismissed it but after further thought (in the shower), I changed my mind.   I’m going to bite.

And now for the rules as detailed as far back as I was willing to follow the chain:

1. To link the tagger and provide the rules on your blog.
2. Share 7 facts about yourself.
3. Tag 7 people at the end of your post by leaving names as well as links to their blogs.
4. Let them know they’ve been tagged by leaving a comment on their blogs.

I’m skipping rules three and four. It’s not that I’m “Captain No-Fun”, I just have a feeling that everyone I’d tag has already done this.

So, here goes…

Seven things about Brainy:

  1. I’ll be supporting Barack Obama on Tuesday.

    Not really a surprise, I mentioned that once already. But I’m not voting for him. I can’t.

    I mentioned that too, but what is new is that I can’t vote for anybody anywhere. I can’t vote in the United States because I’m not an American citizen. And, I can’t vote in Canada, where I am a citizen, because I haven’t lived there in the past five years. What a rip off.

    And you’d have to think, if ACORN were as guilty of specializing in voter fraud as they’ve been made out to be, why haven’t I been contacted? I’m exactly what they’re apparently looking for…

  2. I wear argyle socks. Almost exclusively. (and Mom, I’d like a few pairs for Christmas.)
  3. I haven’t had a real haircut in over 18 months. And only once or twice have I been the obvious victim of a home haircut gone wrong.
  4. Jennifer Love Hewitt and Entertainment Tonight attended my high school graduation. Both witnessed the head of the Board of Education mispronounce my name though she lived just two houses away and had known me since the age of 7. Sometimes I still wonder about that.
  5. I graduated from high school twice. Someday I’ll explain that further. No, sadly, it wasn’t a do-over to pronounce my name correctly. It’s… complicated.
  6. The first job I had out of school only paid $6 per hour. I still hold the same position.
  7. I got married in Las Vegas. For real. To a woman I’d just met. Okay, that second part is an exaggeration…

How was that?

Oh, and Happy Halloween!

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Piggy BankI’ve tried over and over to put together a savings plan where I’ll make weekly transfers to keep things on a steady and constant up-and-up. It worked so well for paying down my debts.

But right now, it’s not working.

All too often, I’m projecting that my checking account will come up short nearly every other month — and on the months that it doesn’t come up short, well, it’ll be too close for comfort.

You know, when the ATM receipt tells you that you’ve only got $0.95 left in your account

That scenario was okay when I was paying down debt, I was supposed to be poor — sorta like a self-imposed punishment for running up my credit cards so high, but now that I’m not in debt, it’s not acceptable.

My next paycheck — coming in on November 6 — won’t be enough to pay the bills *and* make the yet-to-be scheduled transfers before the following paycheck comes in, two weeks later.

Even if it were enough, it’s far too close to the paycheck-to-paycheck existence that I thought, at this stage, would be in my rear view mirror for good.

So, instead, I think I’m going to use the November 6 paycheck to pay the December mortgage bill and all of the utility bills. That’s it. I’ll pay all of the bills and then idle for two weeks. No savings plans.

Then, the November 20 paycheck (along with all paid invoices) will go almost entirely into savings. The monies that don’t go into savings will be to pay the bill for the credit card I continue to use for day-to-day purchases and knick-knacks that I pick up along the way…

Not exactly how I want it, but until I have a little bit more of a buffer in my checking account, I really can’t afford to do it in a more structured way…

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The Cat’s Out of the BagI’ve been living in squalid conditions for over a year.

Rice and beans, beans and rice, right?

I was too “busy” paying down my debt to notice, right?

Cutting corners, you know, to save money?

That’s how I can justify how horrible that room looks…

Please?

Well, not exactly.

While I am horribly ashamed of that photo of the entry way to my home, the rest of the house isn’t like that at all.

If it were, I mean, dontcha think I’d be a prime candidate for the police to come barging through the door with a camera crew in tow for a taping of the show Cops?

The setting is almost too perfect. All it needs is a plaid couch with cigarette burns in the cushions and domestic beer cans strewn randomly about the floor…

My crime would be driving without a front license plate. (Did you know that they’re required?)

“Suspect is a white male of average build. Last seen driving a late model BMW in the vicinity of Gargamel’s castle…”

But now that I’ve shamed myself on the internet (what was I thinking?), it’s time to get things moving on this room (and entire first floor, while I’m at it) and set up a budget for 2009 to pay for it all, which I’ll start in November.

In the months ahead, I have one bill to pay that will likely be paid from my savings account. My horrible homeowners insurance premium is $902 (ouch!) and it’s due on December 18.

Aside from that, though, the month-to-month finances should remain consistent from here on out. No trips planned, no weddings scheduled, no huge holiday expenditures on the horizon, and we never really spend much for our birthdays (which are in the summer anyway). Basically, it’s an empty schedule.

Also, in an effort to speed things up even more, I’m going to try to get my wife on board — wipe out her credit card and boost her savings. A lot.

But my savings need the most work…

Resorting back to what worked so well while paying down debt, I realize that the only way to go is to make it automatic and then, if anything is left over, keep throwing that on to the pile too.

At the height of my pay down, it wasn’t unusual for me to make 7-8 payments to the same creditor in a week’s time. I’ve got to grow my savings the exact same way. If I find $5 in my winter coat pocket, that’s enough to initiate a transfer. Just do it.

So what’s my ultimate plan?

I’d like to be able to save up at least 1/3 of the cost of the remodeling cost before we get started. I’m not saying that I’ll use it all at the onset of the project, but for peace of mind, if nothing else, I want to have it available before I commit myself to such a huge debt load.

The remaining 2/3 would be financed on credit cards.

I know, I know, if you’re new to this site, that must sound crazy. Who’s willing to charge that much?

Well, that’s the method we used on the siding project and it was a whole lot more cost effective than the more common home improvement loan route we took for the roof the year before.

If you’ve got the right cards, the right offers, and a zero balance, you can borrow tens of thousands of dollars at well under 5 percent. No bank or contractor can offer financing that approaches that.

So, to begin, I’m going to continue the auto savings plan I started this month where I’m transferring $400 per month into an ING savings account. I may not reserve it for a vehicle purchase anymore, but I’m not going to cancel the transfer series either.

I was also planning to step up my extra mortgage payments from $50/week to $165/week to keep me on pace to have the mortgage paid off by 2015, but now, instead, I’m going to send that to my savings account plus what I would have been contributing to my savings account anyway and all of my passive income.

All together, on a good month (you know, when my clients actually pay their invoices), that would be around $2310 going in to savings right off the top. That’s freakin’ huge.

Basically, almost $10k every 4 months.

Sounds lofty. Borderline un-realistic.

Probably is.

I’m not really sure, I’ve never not had huge bills to pay…

The plan starts next week.

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Financial CrossroadsIn three weeks time I’ll be eligible to call into the Dave Ramsey show and Dave will ask me how much I paid off, how long it took me, and what my household income is…

He’ll then ask my wife’s name and then we’ll do the countdown together, “Three… two… one… WE’RE DEBT FREEEEEEEEEEE!” and he’ll hit the sound effect button from the movie Braveheart.

Then he’ll ask what the last bill I paid off was and what was the hardest part about becoming debt free.

It’s all very predictable. I already know how it goes, so I’m not going to bother calling in. I don’t like to think of myself as that exciting, you know?

Besides, my story is kinda bland.

The hardest part was waiting for each pay day — time was the hardest part. I knew how to get “here”, I just didn’t enjoy waiting for the paychecks to come in.

And the last bill I’ll pay off is a 0% interest credit card.

Hardly the type of story he’s looking for…

Anyway, I’ll soon find myself with a lot more cash on hand each payday. In fact, that’s already happened — I’ve spent a lot of money already this month just knowing that there aren’t any large looming bills to come in the mail.

That’s coming to an end in November.

So, I’ve started putting together a new budget that will continue to pay down our mortgage at an accelerated, yet comfortable, pace and one that will hopefully make my savings account grow equally as fast as the balance of my 401k has been dropping of late.

What am I saving for?

I’m not sure.

No, that’s not true.

I know what I’m saving for, I just don’t know yet how much I’ll need. And I’m afraid to find out how much I’ll need because it might be more than I can imagine saving for.

Make sense?

Plain and simple, the entire first floor of my house needs to be remodeled. And we’re not talking about a coat of paint and some new lamps…

It needs to be gutted. We need new floors, new walls, new ceilings, new wiring, new plumbing, etc… We need everything.

As it stands right now, it’s an embarrassment — so much so that I almost don’t want to hand out Halloween candy this year because of the small glimpse of the interior that the kids will be able to see.

Yeah, it’s that bad.

Hang on, let me take a picture.

See what I mean? This is the entryway to my home. Mouseover it, you’ll see what I’m talking about. Not what you expected, huh?

It’s looked like this for over a year now. Really.

Now I’m sure you understand my plight.

I just spent all of the these years paying down my debt to get to this spot where I am right now…debt free. And now I’m in a position where I’ll need to spend $30k, $40k, maybe even $60k in one shot and put myself deeper in debt than I ever was before.

Yikes.

I can’t really imagine saving up $30k, let alone twice that! But seriously, look at that place? It *needs* to be done and the sooner the better.

One route would be to just deal with it for another few years (can you imagine?) and save like crazy until we can afford it.

The other route would be to get on the horn, get a few contractors over here for estimates, and get it done in the not too distant future while saddling ourselves with payments for next few years…

Obviously, I’m leaning towards the latter route. See, the roof and siding projects we took on between December 2006 and July 2007 cost us a little over $40k total — and here we are, already, lining up to be debt free in November 2008. While it felt like it took forever, it really didn’t.

History tells me that it’s possible for us to pay for a project this big, but my gut tells me that I want out of this $2500/month-to-creditors cycle… It’s worn me down.

Or maybe it’s walking into my house and seeing that scene above that’s been wearing me down…

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I Give Up!So, after all of this time of avoiding the subject entirely, I suppose it’s time to wrap up this whole PMI topic.

In last month’s net worth update, I briefly hinted at the fact that I was throwing in the towel for now…

I cast out one last line earlier this month to Countrywide when they completed my annual escrow analysis for my attached escrow account (which, in part, pays the PMI premium each month) and was greeted with the same response I’ve been receiving since July.

“Send us a check for $130, take a day off from work, and maybe we’ll drop it, but probably not. The current market conditions aren’t favorable, you know…”

So, for the time being, and likely the entire year of 2009, I’m just going to swallow my pride and continue to be ripped off because I’ve come to the conclusion that this is a battle I can’t win — there are just too many loopholes and specific conditions available in the law for them to fall back on to justify taking this money from me.

Yep, I’ve met all of the commonly mentioned benchmarks; the 22% equity being the most often referenced as a mark resulting in automatic termination.

But there are little sneaky things in there like termination, automatic or not, never happening until reaching the mid-point of the original amortization schedule.

Yeah — like 9 years from now…

In my instance, that’s another $9200 in PMI payments.

And, even then, there are ways for Countrywide to continue to hit me up for an extra monthly fee.

Aggravating is the only word I can think of to describe it.

Seems my only hope is to re-finance and, right now, I’m not ready to make a move like that.

I’m not really sure why I say that, it could just be laziness — it probably is, but for whatever reason, I’m just not comfortable making that move right now…

You know, with “market conditions” being what they are…         ;0)

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Hockey Fight

I took in my first pro game of the season as a member of the media this week, making my return to the type of photography that I’m good at and snapped this shot – one of my favorites of the night.

It’s kinda sad that Gary Bettman, the commissioner of the NHL, has been trying to outlaw fighting during his tenure.

True, in a civilized society, it’s ludicrous for two grown men to beat the snot out of one another over an essentially meaningless game, but it’s one of the few things that can still get the crowd on their feet. And isn’t that the point of professional sports?

What most people don’t realize, hockey fans included, is that it’s very rare for a player to get hurt during a fight — it really is all for show.

Not like WWE wrestling — hockey fights aren’t fake, but they’re not really trying to seriously hurt one another either — though it may look like that…

In fact, considering it’s a game where a rock hard piece of rubber flies around over 100mph, players run into walls at 30 mph, fighting is part of the game, all of the players carry long sticks, and don’t forget that everyone out on the ice has knives strapped to their feet, well, it’s pretty shocking that a tame game like baseball has more injuries.

Hard to believe… Must be a side effect of all of the steroids in baseball…

Anyway, at the conclusion of this specific fight — neither player went down, so technically nobody won — they essentially shook hands and thanked one another for the opportunity as they were escorted to the penalty box.

Yes, they exchanged pleasantries. After a fight.

Must be a Canadian thing…

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I Love my 401k!It’s like I said a few months ago, regarding my falling home value at the time… It doesn’t bother me much. I don’t feel as if I’ve “lost” anything because, really, I haven’t lost anything.

It was money that I never… actually… had.

My 401k has never helped me pay a bill. Not once.

It’s just a number on paper, err, I mean a monitor.

In fact, as I have for months on end lately, I feel like I’m 100% on the right track and it’s starting to show.

Sure, right now, my net worth is officially $1000 less than it was on January 1st. That sounds like terrible news.

But really, it’s not.

My assets, unfortunately, happen to be down $26k since the start of the year

My liabilities, though, are down over $25k since since then too. That makes for a net loss of the previously mentioned $1k.

Doesn’t seem like much to get excited about, huh?

But here’s the thing — I haven’t sold a single asset to pay down a liability.

Not one.

I still have everything (material) that I had at the start of the year — the only “real” difference is that my debt load has decreased by 25 grand.

It’s tough not to call that progress…

Can You Dig It?

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