Archive for March, 2009

Managing your finances is, in some ways, like managing your weight, according to a recent New York Times article.

Taking these three steps can help get your finances, and your body, in shape:

1. Changing your environment to remove food temptations eliminates habitual eating. If you can eat a bag of chips in front of the television and not even realize you finished the bag until it’s gone, you could solve the problem by keeping chips out of the house altogether, or by only eating in the kitchen, at the table, with the television off.
   Changing your environment to eliminate temptations will help you avoid shopping, too. If the Internet tempts you to shop, don’t visit retailers’ websites, and be sure to unsubscribe from online shopping newsletters.It makes sense that if you’re breaking your budget due to certain environmental cues, like the countless opportunities to spend money online, removing those cues will make it easier to cut back on spending. Read more »

Millions of Americans have faced, are facing, or will face foreclosures since the booming housing market busted and the mortgage crisis set in. While President Obama is working feverishly to bring his $75 billion mortgage rescue plan to fruition, people caught in a bind right now are finding creative ways to deal with a foreclosure looming over their heads.

Take the story of one woman whose “American Dream” came crashing down on her. After Heather Gray broke up with her fiancé and was laid off from her job as a public information coordinator for Mesa, Ariz., the 33-year-old found herself in over her head and about to lose the 2,200-square-foot home she bought in 2007. Then she got resourceful.

To escape her impending foreclosure unscathed, the Air Force veteran decided to donate her house to the Murray Grey Foundation, which in turn plans on raffling off the $280,000 home for $100 a ticket. The raffle is scheduled to take place on April 11.

The non-profit foundation financially aids military families facing foreclosure — a facet of the population that saw a 217-percent jump in foreclosure proceedings in the first four months of 2008.

According to a FoxNews.com article, Gray and the foundation struck a simple deal that allows her to “walk away” from her current predicament with a clean slate:

“We made the plan to raise $500,000,” Gray says. “I need $350,000 to pay off my debts in the home that I owe, and the charity will receive at least $150,000, and anything we receive over $150,000 will go directly to Murray Grey, 100 percent.”

The raffle tickets count as a 100-percent charitable deduction and — bonus —every person who purchases a raffle ticket will receive a $500 voucher good for either food or groceries anywhere in the U.S.

But like any too-good-to-be-true deal, there’s some fine print you need to be aware of before you take a stab at it. You’re responsible for paying taxes to the government for the home as taxable income — the same way you’d have to if you won the lottery.

While this probably isn’t an ideal solution for most homeowners facing foreclosure, it seems to work for Gray. She gets the chance to support a charity close to her heart and walk away from $350,000 untouched. Broke, maybe, but debt-free.

Loan modifications have been in the news a lot lately, and for those who lack sufficient income, have too much debt or a less-than-fantastic credit score, loan modifications may be the way to go. Not only do they cost a fraction of what a typical refinance would cost, but they also involve quite a bit less time and paperwork to process. The icing on the cake is that you keep your current loan.

If you had to qualify for a new loan, which is what you’d be doing in a refinance, the clock would be reset on your payment term. So while refinancing at a lower rate can save you hundreds monthly, the aspect of starting over on a new 30-year loan when you had already made it to year 10 on your old loan can be quite daunting to borrowers who dream of someday being mortgage-free.

Loan modifications can only be done with your existing lender, and your lender can’t modify your loan if they sold it on the secondary market. More often than not, lenders do sell mortgages to Fannie Mae or Freddie Mac, which in turn package loans like yours into securities that are then sold to investors. For these reasons, loan modifications weren’t commonly on the radar of many borrowers until the sub-prime mortgage crisis and resulting wave of foreclosures made them a prime feature of President Obama’s foreclosure-fighting strategy. Now, loan modifications are most commonly offered as a means of avoiding foreclosure by borrowers who are already several months late on their payments. Read more »

Groceries consistently rank among my top three monthly expenses. Many of us who are trying to cut our food bills are dining out less and eating in more, so it’s hard not to notice that the cost of many things has risen while package sizes have shrunk.

Shopping sales and using coupons help, but even if you lack the time to do that, there are still many foods that can be had for a dollar. Granted, some aren’t the healthiest (soda and candy bars), but others (dried legumes) offer superior nutritional value if you have the time to cook from scratch.

I set out to build a list of 50 food items you can still buy for a dollar. My “research” consisted of scanning the online sales circulars from four local supermarkets – Stop & Shop, Big Y, Caraluzzi’s and Shop Rite. (Shop Rite, by the way, had the most items for $1 or less while Big Y had the fewest – only one item.) Read more »

Louis Beverly is mad as hell about the foreclosure crisis, and he’s not gonna take it anymore. Instead, he took a bolt cutter to the lock on a foreclosed home.

Beverly calls it an act of civil disobedience. The Baltimore Police Department calls it criminal.

Police arrested the Association of Community Organization for Reform Now (ACORN) activist in the country’s first known arrest for an act of civil disobedience to protest the foreclosure crisis.

FoxNews.com reports Beverly exclaimed “This is our house now,” as he cut the lock on the home. He faces burglary charges for the act.

Donna Hanks owned the home at the center of Beverly’s protest since 2001. She lost it in September after she was unable to make the $1,995 mortgage payments.

ACORN views this first attention-grabbing act as a victory and just the beginning of a bigger movement, or, rather, “program.”

Joe Cox, a Baltimore based spokesman for the group says:

This program is saying, ‘We are not going.’ People say we are breaking the law, but we don’t see how putting a person back in an abandoned property is harming anyone.

I see truth and fault in Cox’s logic. While I’m all for a little civil disobedience every now and then — I mean, really, who isn’t? — is this just another form of rewarding some for irresponsibility while others who’ve struggled to live within their means and make their monthly payments are forced to pay the price?

Is ACORN righting the wrongs of homeowners treated unfairly by big business or just creating a call to action for people to stop paying their mortgages in favor of squatting? The ramifications of a nationwide movement of that kind could open an immeasurable Pandora’s box.

ACORN claims they only want to stop foreclosures long enough to give homeowners time to renegotiate a loan and stay put. But where do you draw the line between homeowners who’ve been wronged and people who just decide they’re entitled to live in a home they can’t afford simply by not paying the mortgage and “protesting” their eviction?

Do you think ACORN’s civil disobedience tactics signify a long-needed stand against rampant foreclosures, or is it a short-sighted effort that could wind up deepening the issue?

Whatever your thoughts on the death penalty, your opinion on the subject probably falls into one of three camps: “Thou shall not kill (ever),” “That person doesn’t deserve to live after committing such a heinous crime,” or “What if we’re sentencing the wrong person to death?”

Bet you never thought you’d see lawmakers repealing the death penalty because it costs too much.

But that’s exactly what’s happening. Legislators in Colorado, Kansas, Nebraska and New Hampshire are trying to repeal the death penalty, and chances are good, the New York Times reports, that it’ll also be repealed in Maryland, Montana and New Mexico.

It may surprise many to learn that life in prison costs less than putting a criminal to death, due to longer and more complex trials, multiple appeals and more attorneys required for cases where the death penalty is sought.

“…[B]ecause of appeals, it cost as much as $1.9 million more for a state prosecutor to put someone on death row than it did to put a person in prison,” the Times story said.

In other states, parole agencies are reducing or eliminating prison time for offenders who violated conditions of their release. According to the Times story, probation and parole violators account for up to two-thirds of prison admissions in some states each year.

I’m continuously surprised by the many ways that this economic crisis is permeating every aspect of American life. How about you?