Tuesday, May 26, 2009

Just Don't Understand

There are a lot of foreclosures in the Dallas area now and everyone is saying this is the best time for us to buy a home, but I am hesitant to do so. Listening to Dave Ramsey, I know it is the best time to buy if you have the money and I do not have the money right now. Felicia and I want to make sure our house is a blessing and not a burden.

Currently, my job is to help people who are 5 to 6 months behind on their mortgage. Right now, the modifications are being pushed to lower interest rates and/or reduce principle balances so homeowners can get lower payments. I always try to be sympathetic to everyone's situation but for a lot of people I cannot put myself in their shoes. I understand having hardships because loss of income, medical bills, divorces, deaths in family, and things like this. But what gets me is when you start to go over their budgets, you start to see misplaced priorities. I tried to understand and help every client by putting myself in their shoes, I understand paying for food and utilities first and then your mortgage. To me that make sense, you need money for these basic needs. However, more often than not, I get clients who have $700-800 mortgages and car payments for two cars that are $1000.00. They pay more for their cars then their mortgage. When you question them about it, the answer is always the same: I need a car to get to work. Two separate clients are the reason for this post, one client that I could help and the other that I wanted to help.

The first client started our conversation by telling me that he was having to decide between feeding his family and paying his mortgage. I prepared myself for this conversation; in these times that is a choice a lot of families are having to make. One of the first things that I always try to find out is the reason for the hardship and if there was a decrease in their income from when the loan was originated to now. In this case, the answer was no and in fact, after probing the income slightly increased. Secondly, I go over the income and expenses over the phone and to determine the debt to income ratio. Also, this info allows for me to numerically see the hardship the client is going through. I took all this info over the phone with him and started to review the account and noticed that his 1st and 2nd mortgage payment equaled $800 and his gross income was around $2,100. In calculating assistance, this difference was slightly high (but still affordable) and warranted assistance according to modification guidelines. After reviewing the rest of the expenses, I noticed he also had a $700.00 car payment for one car. I questioned him about it and he told me the payment was for his 2007 Denali. When I pressed him on the seemingly high car payment for his income, he admitted that this was when he started to have trouble making his mortgage payment. To me, it makes no sense to get yourself in a car payment that high on that income. What is wrong with waiting to buy the car you want when you can afford it?! Let's be honest, he was choosing between driving a nice car and feeding his family.

Why would you look at your finances and see that when you bought the car you started having money problems and blame the mortgage payment? I am not perfect in anyway and I have my own personal finance problems, but I am not paying my car note before paying my mortgage. But of course, he qualified and I had to submit for a modification that is probably going to include at least a 25% principle reduction.

The second client was a man who lost his job six months ago and has been trying desperately to find another. He had been working odd jobs for friends and neighbors as a handy man to make money to pay the utilities and buy food. A real case where the choice between food and mortgage was made, and not once during the entire conversation did he seek pity. In fact, he was optimistic about getting back on his feet and just needing a little help to get by. Unfortunately, in his case he did not have verifiable income. The money he was making to feed his family did not come with a pay stub that he could fax in and it was not stable enough for me to count as income. This guy really need the help and he did not qualify and when I told him that he did not qualify, he thanked me for helping him and he said he would call me back when he got a job. This is the frustrating part of my job, turning down people who could use the help and approving people who have their priorities wrong.

I wish there was a way I could help the people who need help all the time.

Saturday, May 23, 2009

Dark Clouds Coming!!!

It has been a tough week for us and I don't think we are out of the woods yet. We spent every day this week except for Tuesday at the hospital with my daughter and I have been out of work the whole time as result. Finally we are home and she seems to be doing better but we are still waiting for some test results. We are praying that she is better and that the test will come back negative. We are also thankful for all the thoughts, prayers, and encouraging words our family and friends sent our way.

As a result of being out of work for the whole week, I will not be getting paid for it. Unfortunately, I do not have any more sick time to use at work and we will have to be careful with every penny from now on. We pray this will be a small setback that we can recover from quickly. Knowing a storm is coming and not being fully prepared is a little scary. It has made us realize how important it is to get our finances in order as fast as we can. If we had a fully funded emergency fund, money would not be a worry of ours right now. The situation is what is and we just have fight through it and make it right.

Right now, we are trying to come up with a game plan and I think it should be similar to the one we followed when we found out we were pregnant with Maya. We will have to drastically cutback on our expenses and only pay the important bills, first. It is easier said then done, but we can go without satellite and fast food. Before this happened we had planned to have a garage sale during the first weekend in June and we believe it is a good idea to go ahead with that. More than likely, the yard sale will be at our house with a couple of families joining us. We are trying to come up with other ways to get generate funds and Felicia is trying by getting her online business going. I am still trying to figure out how I can generate extra income as well.

We see the dark money clouds coming and we are trying to get a big umbrella to help us through it. I am a little relieved that we still have some money left over in savings to help and happy that I only had to miss one week of work. I know we are not out of the woods yet, but I pray it is only a money problem and my daughter never has to go through something like this again.

Friday, May 15, 2009

State of Affairs

We are still trying to get back on track with our money plan, and I am trying to remind myself what motivated me in the first place. Last June, we found out we were having our second child and that made me stop and evaluate where we were financially. Honestly, I did not like it. This is what I saw: no savings, renting a small house that would not be big enough for all four of us, knowing that Felicia would not get paid on maternity leave, and $20,000 worth of debt.

Stressing out about our current financial status lead me to a billboard I kept seeing on my way home. This billboard had a picture of a bald guy on it and the words “Act your Wage”. I started to realize that we were not acting our wage and digging ourselves deeper into trouble. I changed the radio station to hear what this bald guy had to say and immediately realized this guy made a lot of sense, especially for people in our situation. I began to research the bald guy online, and found out that his name was Dave Ramsey, and then I decided to buy his book. I bought the book, read it, and talked to Felicia about it. She saw the same things I saw with our current situation.

Felicia and I talked about this and began to prioritize which issue to tackle first. Knowing the baby was on the way, we decided to save as much as we could. I also recognized that I needed to increase my salary, and in November, I was given an opportunity to do so. I applied and accepted a position at work that increased my pay by 10%. From August through January, we saved $3200.00 and that worked out to be an average of $533.33 a month. Looking back, it felt good to see the savings account grow every payday. The first thing we did on payday was pay ourselves and it grew and grew and our stress level decreased. Maya was born and Felicia was out of work for 12 weeks and we did not even spend all of the money we saved up.

At first when Felicia went back to work, we felt that we deserved a little break from our tight spending control and relaxed a little too much. When she went back to work, we had $845.00 in savings and with not keeping up with what we spent we had to tap into it needlessly. For this reason, I am trying to get motivated again and taking stock of our current state of affairs. Now, we have $600.00 in savings, renting a house that is too small for all of us, and $20,000 in debt. What do we tackle first? Thanks to Dave Ramsey, we know where we are supposed to start. We need to add another $400.00 to our savings to complete Step 1 again. After that, we need to tackle our debt with the same gazelle intensity we had before.

***Side Note*** After talking to our financial partners, Louie and Kim, we have decided to go to Financial Peace University. There is a class that starts on May 31st in Cedar Hill, and we are going to attend the preview class on May 17th. Hopefully, this can help us with our battle with spending.

Saturday, May 9, 2009

Starting To Turn It Around

I have not posted anything in awhile and so I am going to try and catch up on everything that has gone on.
Starting To Turn It Around

I feel like we are starting to turn our downward spiral around. The week before our son's birthday party we spent way too much money and still had to pay for a party. Initially, we had planned a low budget party and we kept to that game plan. I thought it came out nice and Anthony had a good time.

I think Felicia has the gazelle intensity now because she got after me the other day. On my late day for work, I thought I did not have time to make my lunch so I decided to buy lunch and when Felicia found out she nearly hit the roof. She looked at me and reminded me of the sacrifices we need to make now to get where we want to be. At first I was offended, who is she to be getting after me for buying lunch? Later in the day, she looked at the bank account online and discovered that I also bought breakfast instead of making it because I thought I did not have enough time. As soon as I answered the phone, she made it known that she was mad at me. Again, I was offended and ready to list all the times she messed up with money, but then I sat and thought about it. She has the gazelle intensity that I have been waiting her to have and now I was a wounded gazelle.

So I am trying to follow her lead and rev it back up. We made the budget and agreed on it and for the most part we have stuck to it. We are talking about it more to each other and reminding each other about our agreement when one of us starts to stray.

Dave Ramsey Live
Felicia, two of my cousins, and I went to see Dave Ramsey Live on March 28th. He was awesome and funny. He pretty mucg goes over everything in the book but in a little more detail. I like how he separates spouses in two categories: the nerds and the free spirit. I think I am the nerd, most of the time, and Felicia is the free spirit. The nerd gets all the spreadsheets together and talks about all the details in the budget and the free spirit is bored to tears. Dave's advice was for the nerd to make the budget and handed to free spirit and then shut up. After that the free spirit has to look it over and make a couple of changes to it. The last budget we did that is what happened.

The coolest part was when he walked over to our section and asked for the engaged couples that have set a date for the wedding to stand up. My two cousins, Louie (my cousin) and Kim (his fiancee), stood and told Dave the date they set and he gave them and 7 other couples free admission to his Financial Peace University Class. He made everyone make two promises: they will go to the class and when they succeed they will pay for someone else to go through it.

Tomorrow night, we are supposed to be having dinner with Louie and Kim to discuss FPU. They had their first class on Wednesday and Felicia and I have not found a convenient time and a place to start our classes so they are going to tell us how it went. I can't wait to find out what happened. Spoke to Louie earlier and he said that they go into more details about the Baby Steps and everyone in the class seems comfortable because they are all at the same starting point. Tomorrow, he will go into more detail.

Stupid Tax

A week after Maya was born I paid a stupid tax. I am really embarrassed to admit it but I have to be honest and admit to it. A couple of months ago, I switched our Energy Provider and normally Felicia paid the electric bill. Since I was the one that switched companies, I agreed to be responsible for paying it. Well, since I was not use to paying the electric bill I forgot about it. Of course the company cut off the lights while Felicia and the kids were here and I was at work. I had to call to find out how to get it on. According to their procedures, I had to send certified funds (which makes sense), and then I had to fax the receipt requesting for the lights to be turned back on. Let me tell you, I did not want to go home, and I even asked a co-worker if I could hide at their house. As a result, we had to spend a night at my in-laws and pay $20 to send a bank wire. Talk about stupid. Side note, my mom said I take after my father when I told her what happened, but that is a story for another day.