Happy New Year 2010!
Wow – how can 2009 be completed already? Well, I guess it is…so welcome to 2010! (Goodness gracious is another decade already over?!?)
Of course the new year is a time when people typically evaluate their current life, compare it to their ideal life and make a bunch of resolutions to try to help them bridge the gap between the two (or bridge the chasm, as it were). I usually don’t get too much into the resolution stuff (though I did make one last year and actually made two this year (actually, the first one is the same as last year’s)), but since any time is a good time to reevaluate how things are going for you, that does make now a great time to do it.
Whether you are feeling pretty good about where you are or you have a host of resolutions that you made to get back on the right track, the most important task is not making the resolution but actually following through on it. In hopes of providing you with a little more motivation to follow through, I thought I’d share some of the lyrics from a song that I have found pretty inspirational over the past year. Hopefully reflecting on the words can act as a catalyst to help you turn your resolutions into reality this coming year…
The Motions written by Matthew West, Sam Mizell, and Jason Houser
This might hurt
It’s not safe
But I know that I’ve gotta make a change
I don’t care
If I break
At least I’ll be feeling something
‘Cause just ok
Is not enough
Help me fight through the nothingness of lifeI don’t wanna go through the motions
I don’t wanna go one more day
Without Your all consuming passion inside of me
I don’t wanna spend my whole life asking
What if I had given everything?
Instead of going through the motions
Thanks so much for reading BorrowFromNone in 2009 (if this wasn’t the first post you read!) and I will continue to try to improve the content and the writing so that you’re still reading at the beginning of 2011!
I do hope that you have had a great 2009 and that 2010 is even better – in fact, I hope that 2010 is your best year yet. May God richly bless you in 2010!
Happy New Year!
Guest Post: Do you Qualify for Obama’s Refinance Program?
In March 2009 President Obama launched a mortgage assistance program designed to help struggling home owners keep up with the mortgage payments and avoid painful foreclosures. The program got extended due to its success, and you may still qualify today.
How to know if you are eligible for the Making Homes Affordable Program?
Just answer 4 simple questions:
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Is your home your primary residence?
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Is the amount you owe on your first mortgage equal to or less than $729,750?
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Are you having trouble paying your mortgage?
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Did you get your current mortgage before January 1, 2009?
If you answered yes to all, you will most likely qualify for a Home Affordable Refinance Program (HARP).
Keep in mind that vacation and commercial properties are not included in the program. The property you are refinancing must be your primary residence, such as a house, a condo, a town house, a co-op or a manufactured home.
Mortgage refinance rates with the Home Affordable Refinance Program go as low as 2% – the lowest in the country.
To learn how to save on monthly mortgage payments with refinance visit the Making Homes Affordable website at www.makinghomeaffordable.gov
Will I Save Money with Refinance?
In order to reap the best returns on refinancing, make sure that the new interest rate is at least 2% lower than your current rate; you must also know in advance that you will live in your home for the next several years. If you are planning on moving out in a year or two, then do not refinance, since the process will not save you any money, and may actually leave you with a negative. Mortgage refinancing is a long term savings strategy, not a quick fix, although an instant difference in monthly payments can be felt right away.
To calculate the amount you will save on a mortgage refinancing, find out your closing costs. Once you know the closing costs, combine the monthly savings until you reach the closing costs sum. Then count the months it took your new savings to cover the closing costs and you will know the break even period.
For example, if your old mortgage payment was $1,442 and your new payment is $1,003, then your monthly savings after mortgage refinancing are $439. If the closing fees were $4,500 it will take approximately 10 and half months to break even, after which you will truly start saving money.
Your Home is NO ATM
A big mistake many people made, is they used their home like an ATM machine to pay for fancy cars, vacations, renovations and other joys of life. It is all fun, no doubt, but if it’s not your money – don’t spend it, because in the end the debt will come back to bite in your bottom. It has in fact bitten thousands of people, who were either reckless with their home equity or who opted for high risk mortgages such as interest only and balloon home loans. Don’t touch your home equity, unless you really have to (kids education, medical bills, or emergency issues).
Overdraft Fees Mean Big Bucks for your Bank
Do you have “overdraft protection” on your checking account? Overdraft protection enables your bank to take care of you when you make a little boo-boo and spend more money from your account than you actually have in there. Maybe you’ve written a check that would “bounce” otherwise, or done a debit card transaction for a little more than you currently have in your account, or tried to withdraw a touch much from an ATM. Instead of rejecting the debit card transaction or popping up a little message on the ATM screen informing you of your malfeasance, the bank magnanimously grants your request for that money you don’t have by pulling money from another of your accounts or plopping it onto your credit card (now your bounced check is a different situation in that you’d typically get whacked with check return fees by the entity cashing the check if it is a company). Wow, isn’t your bank awesome – they are totally looking out for you!
My bank is awesome!
Well, not exactly. There is the little matter of the “convenience fee” that the bank takes for providing you this service – something on the order of $35. Now that might not sound like a huge deal (although if you are scraping so close to the bottom of your account balance that you are overdrawing it, $35 is probably a significant penalty!). But this adds up to big business for the banks. According to Forbes.com, Bank of America took in $692 Million on overdraft fees in only THREE months this year! Almost 20% of customers end up getting charged an overdraft fee while almost 4% rack up 5 or more in a year! Read that again – $692 Million in three months for a single, albeit large, bank!
What to do?
Clearly, you really want to avoid ponying up some of your dough into BoA’s billion-dollar-kitty of overdraft fees. One step would be to simply not sign up for overdraft protection (or un-sign-up if necessary). Interestingly, congress is changing the way this works next year and not allowing banks to automatically opt customers in for overdraft protection. Instead, a customer would have to explicitly sign up. But all of this is really just treating the symptom and ignoring the real problem, right?
Let’s be frank here, accruing one of these fees is really a matter of your personal negligence. Obviously you know that you should not be trying to take out more money than what currently resides your account (you do know that, right?). So if you do that, it’s most likely a matter of you not keeping abreast of your account balances. In this day and age of internet banking and smartphones, you do not have a good excuse for not knowing your account balances when you are out making purchases or hitting the ATM.
So, keep up to date on your current balance. Try to build in a little bit of cushion into your account so you don’t have to worry about negative numbers (I know, that’s not possible for everyone).
And remember: $692 Million in three months!!
Weekly Bible Verse – Accepting Criticism
If you ignore criticism, you will end in poverty and disgrace; if you accept criticism, you will be honored. Proverbs 13:18 (NLT)
Ignoring criticism leads you to poverty and disgrace. In other translations of the Bible, the word translated here as “criticism” is translated “discipline,” “instruction,” and “correction.” If you ignore those around you who are trying to help you through instruction and correction, simply put, you are being foolish. As the remainder of the proverb states, those who do heed the instruction/criticism/correction will end up not in poverty and disgrace but will be honored instead.
We all know that criticism or discipline (yet another translation) is not fun to accept. No one wants to be criticized. It is usually uncomfortable and sometimes painful. At the same time, as shown here, it is beneficial for your long term success (I’m all for avoiding poverty and disgrace). So, when a friend offers you some advice or correction, listen and learn as you’ll be better off for it in the long run.
God bless and have a great week…
Guest Post: Five Frugal Multi Millionaires
Not every millionaire was born with a silver spoon in his mouth, nor does every millionaire live the lavish lifestyle often associated with the title. In fact, many millionaires live very reasonable, unassuming lifestyles, often combining frugal spending habits with wise investment choices to build immense wealth. It’s important to remember that being frugal doesn’t necessarily mean you are cheap, it just means you make well-informed and smart choices regarding your money. For many millionaires, it isn’t necessarily their lofty incomes that create their fortunes so much as their frugality and ability to save and invest the money they do earn. Here are a just a few examples of prodigious savers who turned their frugal savings into fortunes.
1. Warren Buffett
It’s hard to find someone who hasn’t heard of Warren Buffett, either because of his extreme wealth or the amazing way he achieved that wealth. This Nebraska native turned successful investor and business owner, came from a working-class family in Omaha, and even joined a fraternity (Alpha Sigma Phi) during his college days at The Wharton School, University of Pennsylvania. Along his path to millionaire and then billionaire status, he never lost sight of living frugally and making level headed business decisions. According to Forbes Magazine, after losing $25 billion (USD) in 2008-09 Buffett is still the second wealthiest man in the world at a net worth of $38 billion. On his Wikipedia.com profile his annual salary — $100,000 (USD). Talk about living frugally in the overall scheme of things — wow!
2. Marjorie Kennedy & Jack Lynch
You might not remember their names, but you might remember hearing their stories or ones similar to them. Both were unassuming librarians, (Marjorie in Scotland and Jack in North Carolina). Both of them lived unassuming lives, saving and investing well, and living within their means. At the end of their lives, both were able to leave vast fortunes (well over a million dollars), far larger than their librarian salaries would belie. These are the typical ‘millionaire next door’ type stories you never expect due to the relatively normal and unassuming lifestyles these people live. See, it doesn’t take a huge salary and fancy job title to becomes rich!
3. Ingvar Kamprad
What, this name doesn’t ring a bell? How about IKEA? Ah yes, now you’re making the connection. He is the Swedish billionaire, one of the richest men on the planet, who not only grew IKEA into a name recognizable worldwide, but also maintained the characteristics of a frugal millionaire in the process. In his Testament of a Furniture Dealer Ingvar states, ‘Expensive solutions to any kind of problem are usually the work of mediocrity. We have no respect for a solution until we know what it costs.
4. Jen Smith: ‘Millionaire Mommy Next Door’
On her website, Millionairemommynextdoor.com, Jan chronicles her path from minimum wage earner to self-made millionaire. It is a remarkable, yet for most of us, very attainable path that made her a success. Unlike Warren Buffet who, while starting small has built a nearly unimaginable fortune compared to the everyday investor, Jen Smith’s story gives us all hope that hard work, common sense, and learning to do things yourself rather than paying others to do them for you, can lead to financial independence and success. Here are two quotes from Jen’s website that I think sum up the lifestyles of many frugal millionaires:
“We tend to be do-ers, not have-ers. For instance, we don’t care much for ’stuff’ (a McMansion home, fancy cars, clothes or jewelry), but we spend generously on recreational pursuits, organic foods and long trips to faraway places.”
“The morning I calculated our net worth to be over one million dollars, we were living in a rented apartment, driving a six-year-old car, and wearing used consignment store clothes. At age 40, we were ‘closet millionaires’.”
5. Dave Ramsey
Ramsey is the host of a nationally syndicated radio program and podcaster giving live, one-to-one personal finance advice to callers. Dave made a fortune from real estate in his 20’s but he went broke. With lessons learned and a resolve to do it the right way he started again and made his second million from real estate. Now, Dave is renowned for his Christian background and no nonsense approach to personal finance, especially when it comes to getting out of debt, staying out of debt, and living financially free. So, if you listen to Dave’s advice, you’ll be taking personal finance advice from a wealthy man, not your broke friends or family.
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