Financial Peace can be found in these troubled times!

Financial Peace can be found in these troubled times! Yes I know it sound odd, but it is true. My 401k may be suffering like everyone else', but that doesn't mean that my family is suffering during this financial crisis in the market. In fact, the opposite is the case. We are doing better now that we were one year ago! We have no credit card debt. We have no car loans. We have no furniture that we are renting to own. All we have left in our debt category is just over $10K and our house. We have eliminiated well over $30K in debt over the last year on less than $55K of income. If we can do it you can too. Just create a budget and live your financial life responsibly.

The place we find ourselves in this troubled time is actually a peaceful place. We can pay our bills and this year like last year as the holidays approach will not be a time of dread, due to the mounds of new debt that will be taken on for Christmas. I can testify to you all that there is hope if you are on the edge or even if you are already in the icy waters. That hope is in the form of the Seven Baby Steps that can be found in Dave Ramsey's book "The Total Money Make Over".

Do your family a favor this day go find a copy of this book (at the library, a bookstore or online) and begin to read it. You will be greatly blessed if you do! I know we have been. Join us in rejecting the failed policies of living in debt! Discover the joy and the peace that can be had when you no longer live paycheck to paycheck due to the money you have already spent. Learn the principles that will free you from the bondage of debt. There will never be a better time than today to step forward and take control of your financial life.

Freddie and Fannie and the ENRON Crooks!!!

There is a lot of panic in the financial markets right now with the declining stock prices in most sectors. I personally attribute this insanity to the poisoning of the credit markets by the Democrats who were in charge of Freddie and Fannie. They purposefully mislead investors so that they could rake in $90 Million in bonuses based upon their fraudulently cooked books. The securitized mortgage instruments that they knowingly assisted in pawning off is the height of fraud in my book. These bad mortgages where sold Grade A or AA investments to the unsuspecting and the greedy alike are criminal in my opinion.

These CEO's and CFO's from Freddie and Fannie along with those Senators and Congressional members who accepted money from these organizations through their lobbyists are corrupt and ought to be punished in a fashion at least as harsh as was given to the ENRON crooks! If the heads of Freddie and Fannie had been life long Republicans they would already be indited for the crimes they have committed and if the top three Senators who took money from them to look the other way had been Republicans they would be the subject of countless exposes on the evening news! But instead they are given the keys to the kingdom and the mess is swept under the carpet and the American people are scammed for over a BILLION DOLLARS! And one of them, namely Barrack Obama, set to become the President of the United States in a similarly fraudulent fashion.

ENRON cost few thousand people everything, but this scandal is going to cost us all something alot more dear and precious.; or freedoms in the name of change. That change has a name and it has failed EVERY TIME AND PLACE it was tried. Communism, Marxism, and Socialism.

700 BILLION DOLLARS!!!!! HELL NO!!!

This bail out that has been proposed by President Bush, Hank Poulsen, and the rest of the Goldman Sachs team they have brought to Washington DC, is TOTALLY BOGUS!!! It is INSANITY!!

Newt Gingrech is 100% right on this issue!

1. Remove onerous regulations that are sitfling Small Business.
2. Repeal Sarbanes-Oxley!
3. Eliminate Capital Gains taxes immediately to encourage market based investment solutions.
4. Pass a REAL ENERGY BILL that encourages drilling and alternative energy developments.

This insane push to SOCIALIZE the Financial Markets is WRONG and WILL NOT SOLVE the problem!

I urge everyone who reads this to Call your Senators and your Representatives NOW and tell them to OPPOSE this BAIL OUT!

Another one bites the dust!!!

The financial sector may be realigning itself after the insanity in the marketplace due to BAD FEDERAL REGULATION, but at least one financial institution is $9300 richer today, as we paid off another student loan, (thereby doing our part to avert the coming crisis in the Student Loan market. Just a little over $10,000 to go and we will be calling Dave Ramsey to tell him we are "Debt Free Except for the House". Coupled with the promotion and raise I just got at work our Federal Tax Refund this year should put us pretty darn close to that mark. Time will tell though for certain this time next year we will be working on our Real Emergency Fund of six months worth of cash. Too bad the Democrats at the helm of Freddie and Fannie could not understand that the only way to remain solvent financially is to be properly capitalized. Perhaps they (Raines, Johnson and Gerellic) will do a better job of running Barrack Obama's campaign coffers. Yikes is he a fool putting those three embezzlers in charge of his money! You know what they say a fool and his money are soon separated. I guess that explains a lot about our current financial crisis as a nation. We are a nation run by of financial fools and socialist idiots! It is sad that Mitt Romney didn't win the Republican's slot I am certain he would have know how to solve these financial situations. Perhaps McCain / Palin will be wise enough to put him in charge of the Treasury Department.

Changing Your Money Mindset...

I came across an interesting money article by Mike Peterson who is the senior certified counselor and a co-founder of American Credit Foundation, which is a non-profit credit counseling organization. He is the author of Reality Millionaire, from which this article is excerpted.

I don't much about Mr. Peterson other than what is on his website at this moment. However, I going to do some more digging because the premise of his work appears to be in alignment with God's Laws of Managing Money and Good Common Sense Financial Management. I know I agree whole-heartedly with his observations and suggestions on from his article titled Changing Your Money Mindset .

This post is in response to a really outrageously out of perspective response to the article.

Pete wrote this response posted 06.04.08 12:54 PM:

"Apple stores not fake like the US economic and economic numbers. Nothing is
more fake then the US economy . The recession will get worse and may turn into a
DEPRESSION. Americans deserve a great DEPRESSION for spending more money then
they earn on stupid items like an ipod. "

This attitude is at the core of our problems. Pete isn't getting the facts at all... Here was my response to Pete. I thought of being a bit harsher but I restrained my baser nature.

Here is my response:

Pete, turn off CNN! They have an agenda that ignores FACTS. If
you don't believe me check the chart in USATODAY... Take note that is is
slower growth than previous years but GROWTH nonetheless... http://www.usatoday.com/money/economy/2008-05-29-gdp-jobless_N.htm

We are not even in a REESSION so go get an education preferably in a third world
nation it will teach you to stop spouting your hatred of America. We have
problems but they are not the ones you are spouting!

For the record here are two definitions that ECON101 might have though
you if you were paying attention.

RESESSION is "A decline in business activity. Often defined as two
consecutive quarters with a real fall in gross national production."

DEPRESSION is "A severe or long recession... although the distinction
between a recession and a depression is not clearly defined, it is often said
that a decline in GDP of more than 10% constitutes a depression."

I doubt Pete will ever read my comments or learn the error of his ways. The reality is that America is great and so is our economic system INSPITE of the destructive and corrosive legislation that seeks to create a kinder more SOCIALIST system. Last I checked both Russian and China had embraced Capitalism why is that we as a nation of idiots are seeking to embrace a failed economic system? That is a question I wish I had an answer to.

Another Debt Bites the Dust!!!

As if to the beat of the iconic Queen tune, I am pleased to report that "Another One Bites The Dust!" This time I chose to use dynamite on the logjam that was my car loan because the speed at which we were shedding the balance wasn't fast enough for my goals. So I placed an ad on Craigslist and sold it. (I really like Craigslist!)

I got just under $1600 over what the bank was owed for it and turned around and purchased a 2001 Taurus SEL project car for $1600. It is going to require lots of elbow grease, to be at the level of quality I desire in a personal vehicle but there is plenty of time for that work to be done as it can be afforded. It isn't the best looking but it is 100% street legal and the heater works very well as does the engine.

So the total for the first six months is just over $18,500 in debt reduction! Not bad for a few hours less sleep and a willingness to take one step back in order to change the financial path that my family was walking. Not bad at all! In fact it has brought hope and vigor back into my marriage!
Now we are on to the first of the Student Loan payments. I anticipate having it paid off before the middle of the year, provided we can keep up with this pace.

Here's an idea for making Money...

Here is an income idea. I haven’t had the time to work it myself so I don’t know how well it will work. Log on to Craigslist.org in your area and keep an eye on the FREE STUFF section. Collect the goods that you deem quality items, then turn around and sell them for pennies on the dollar and you are making money in a moral and totally legitimate fashion.

Here’s the beauty of this idea as I see it. It is entirely entrepreneurial and it will reward you for diligence. Not all items are of value true but you would be surprised at the number and quality of the items that people are trying to get rid of on any given day. What is even more surprising is that they don’t feel comfortable “SELLING” so they are giving them away instead. Which means your cost is lower than the TRUE COST of internet any “biz op”. What’s more I’m not charging you a dime for this idea!

Let me know how you do.

Here is the ad that got me to thinking about this idea. I am going to give it a try tonight after work. I will let you know how it works out.

free household items
Date: 2008-01-23, 8:43AM AKST

I am moving in with my fiancé and have a house full of things I don’t need here is a list of what I have:
a 3 person couch
entertainment center
kitchen table
Lazy Boy type recliner
really nice head board and a big mirror that match the head board I would like $10 for the mirror as it is really nice
boxes of kitchen ware plates bowls forks spoons
all sorts of kitchen utensils
pots and pans
new child’s highchair
i also have a very nice glass top computer desk i will let go for $30 everything else is free
coffee table
a couple different size end tables

sorry no pics will try to get some up my name is Mike I am located on minnesota and tudor 1301 west 42nd ave on the corner of garfield and minnesota i will be there between 6 and 7 tonight if you are interested please call around then everything will still be there it is a first come first serve nothing goes until after 6pm.

CHRISTMAS THIS YEAR WAS WONDERFUL!!!

If you are dreading the coming of the credit card bill for Christmas 2007 or worse yet you still haven't paid off 2006 yet... This may be a bit of lemon juice in the paper cut, but it isn't meant that way.

This is the first Christmas that we have celebrated without using any form of debt. It was wonderful! It was really quite liberating! It is true that I got carried away and bought a few extra gifts than originally budgeted but that is just the way I am with Christmas. The important point I wanted to stress was that it didn't bugger our finances.

This is proof that you can live through Christmas with out VISA or Master Card! I even did some shopping online, using PayPal's new virtual debit card and it worked well. I am so grateful for the Financial Peace that is in my family's life now.

Why You Should Pay Off Home Early...

In the course of my advocacy for responsible financial behavior I posted a copy of "The Baby Steps" on the bulletin board at work. After a few days someone wrote the question "WHY?" by Step 6 - Pay-off Home Early.

Here is the response I posted in response. It is a bit more lengthy than I normally post but the fourth and final example seemed to require a bit of a lead in, to illustrate the power of paying off the house early.

I am going to assume that fact that you are going to save more than $250,000 in interest payments isn’t enough for you; so let’s look at what Dave Ramsey who spawned this question had to say in an excerpt published on his website about this topic. It is only an excerpted summary but years of listening to him will reveal what Paul Harvey calls “the rest of the story”.

QUESTION:Why should a listener pay off his home if he can put the money in a 12% annual increase mutual fund?-SHORT ANSWER:With this plan you’re not considering the taxes that you pay on the investment, which will bring your investment down to about 9%. You’re also leaving out risk. An investor who fails to factor risk into the equation is naive. A borrowed home adds substantial risk to your portfolio versus a paid-for home. - Dave Ramsey

"Remember, the borrower is slave to the lender." - Dave Ramsey

There is a lot more to this answer but it was unavailable when I tried to retrieve it from the server. So I will answer this instead. Dave stated that it adds “substantial risk to your portfolio”. Here is why.

Investing in quality opportunities requires that you be able to properly compare two or more competing investment strategies and to do so you must factor in each investment’s Risk Profile. A Risk Profile is referred to, as a Beta. It is in simple terms factoring in an investments’ volatility into your projected return calculation. If you watch the Stock Market at all you know it is a volatile.

The fact is if you ignore the Beta you are 85% more likely to lose money over the long term in the volatility of the market. Lets compare four financial activities / investment / opportunities.

The first is playing the roulette wheel in Vegas, a pass time of many, and by far the RISKIEST. If you bet $100,000 on Red 23 what is your risk? I am not very good at calculating the House odds but I am confident that you have 99.7 or more percent chance of loosing EVERYTHING, unless Danny Ocean and the gang are helping you. Never forget the HOUSE ALWAYS WINS. Granted this isn’t an investment I would consider but there are a few that I have met who have suggested it is a viable way of creating wealth. If you own the House then you are correct in that belief.

Next an investment in an oil/uranium/gold/silver/whatever the flavor of the month is stock recommended to you by an email guru you have never heard of before you opened the email. First you should realize they are using the Internet to inflate the volume and price of a finite commodity, which is governed by the law of supply and demand. However if you disregard your feeling of this is risky and plunk down $100,000 on that stock and hang on like this guru suggests you will find that you now own about $25,000 dollars in spite of the one time unrealized gain of $200,000 at which point the guru sold and failed to inform you. Thus you are left holding the bag so to speak. If you don’t sell out before 30-years has come and gone perhaps you will see that stock get purchased by a big competitor and realize some growth as a result but still your net result is not great and more than likely it is still a net lose. Not a very good plan as it is only slightly better than betting on the roulette wheel in Vegas, but only because you still have some of your money.

Third is the standard S&P Stock Market Index Fund. If you put $100,000 into it at the average of 12% per year gain, where do you end up in thirty years? You end up with $1.5MILLION in your account! What are the odds that you have enough for retirement now?

Why did I choose the $100,000? I chose it, because the average American owes TWICE that on their mortgage balance. Early payment of your mortgage can result in a substantial gain as a result of interest not paid, for the average mortgage that has 20 to 25 years left that is a savings of nearly $250,000.

If you didn’t pay it off early and continued to do what you have read or been told that you should investing while are paying off your home or that you should be using the equity your home has given you. Fair enough, lets look at that often recommended investment strategy. Let say you are the average American and you manage to achieve $50,000 worth of investment over a 30-year period, instead of using it to pay off your home early. That means you keep your $1500 per month house payment and invested the $50,000 you borrowed from your house at 6% and are making an additional $300 or more a month. By the end of that period you could have earned as much as $400,000 on that money. However you paid at least $250,000 in interest on your home loans.

SO, LET US DO THE MATH….

I will be merciful and not mention the taxes due or interest costs associated with your HELOC. Let’s just use the best-case return as so many other slick sales folk so often do.

$400,000 in your investment account
-$250,000 on your home loan
-------------
+$150,000
So in summary a large amount of risk was carried over 30-years and only gained $150,000. YEAH!!!! You made money this time, but at what cost? You could have had nearly TEN TIMES that amount if you had paid off your house in ten years and invested the $1800 per month in a 12% Mutual Fund, possible if you follow the Baby Steps. The following chart is just a rough example of what is possible.



As you can see from these four options that their risk profile was different. Each of these holds the possibility of gains and losses in the short-term, yet only two hold long-term growth and only one is true wealth generation. That is why you must factor in the Risk Profile. This is why paying your house off early rather than investing makes good solid financial sense. If you fail to calculate risk you are not a savvy investor, plain and simple. I think you will find that there is a SUBSTATIAL difference between these investments options.

There is one more factor that MUST be considered, Peace of Mind. It might not be that important to you but I guarantee it is for your wife.

Risk is a very serious factor to consider when you are investing your money. Don’t be naive. Ultimately, it is your choice. You have likely heard a dozen differently short game only versions of advise from accountants and or tax preparers, that you are giving up tax savings if you pay it off early. They are right, but you are EARNING MORE by doing so A LOT MORE! Just remember that they too are living paycheck to paycheck and while they may drive a nicer car, but they are STILL BROKE. Yes I know they tell you that paying off you house isn’t a good idea.

I for one am not buying their “tax savings” Baloney Sandwich. I will let you make your own decision on how that sandwich tastes.



P.S. Lest you think is just this crackpot Dave Ramsey who recommends paying of your home early… Here is what the AARP says about paying off your house early.

“ Paying off your mortgage has some advantages, such as:

Providing Emotional Security. Paying off your mortgage provides emotional relief from the anxiety of owing money. You may simply feel more secure owning your home free and clear. This sense of security may matter a great deal if you plan live in your home when you retire. Also, you may desire to leave a debt-free home to your heirs.

Investing for the Future. Without a mortgage payment, you'll have more money to invest for the future. Your retirement savings can grow more quickly. Mortgage interest on a large or high-rate loan may be costing you a hefty sum. Instead of paying interest, you could be earning interest with your funds.

Meeting Retirement Needs. If you are already retired, paying off your mortgage can free up your money for other things. Experts recommend accumulating enough retirement savings to have at least 70 percent of your working income. If you're short of this goal, eliminating mortgage payments will free up monthly income for living expenses. This approach is especially helpful if you have a large mortgage with high payments.

Reducing Loan Stresses. Paying off your loan removes loan-related stresses, too. Houses gain and lose value, depending on local conditions. These market changes affect the equity you've built in your home. Without a loan, you remove the risk of "owing more than you own." Also, you avoid being hit by climbing rates if the interest on your loan is variable. You may also want to pay down part of a loan if it is large. “