Soon-To-Be Homeowners

I mentioned in a prior post that my husband and I made an offer on a house. Well, there are financial issues with it, mainly, the current homeowner didn't pay her mortgage. She hasn't done it for a while actually. Usually this isn't a problem, but the mortgage was broken down to an 80/20 loan. Meaning that 80% and 20% to purchase the home was separately mortgaged. And, this lady had each loan with a different lender, Bank of America and Ameriquest to be exact. Well, these two wonderful institutions have been fighting over the title of the house and are unable to clear it. Regardless of the many offers on the property, the house remains on the market to this day.

So, we ventured off once again with out realtor a week later and toured some nice and not-so nice properties. The second to last house we visited, we fell in love with. It's a cute little ranch house on a slab that's only 7 years old. The downside was the lack of a basement, but the interior space makes up for that. We made an offer later that afternoon, after withdrawing the other one of course. After negotiating for a couple of days, they accepted our offer. Yay! One step closer.

I scheduled inspections later that week and just now received the report from the guy. The only thing wrong with the place was that the ventless fireplace had no gas inlet. It looks brand new so I'm guessing they didn't hook up the gas line. They are going to fix that. Other than that, just the basic wear-and-tear and little fix-ups for us to handle. The house is pristine so the cleaning won't be too laborious and all that will be left is the personalization.

We went to Home Depot last night to look at their selection of washers/dryers and found a pair that fit our price range. You know, we're paying cash. I also picked out the paint colors for my daughters bedroom and her bathroom. That's the first room we're tackling. After that, we're budgeting a specific amount for monthly projects around the house.

I have to say, we're really excited about this house and owning it! We've been married for 7 years, ironically, that's how old the house is also. Almost like we were made for eachother. Heh, I know, that's pretty cheesy. But the thought did cross my mind. I believe everything happens for a reason. Like the previous house. We thought we really wanted that one. Then we found this one. God works in funny ways sometimes. And, the square footage is so much more. That previous house had 1265 square feet, but our house has 1800! Much more space to grow into, don't you think?

I'll be posting some pictures shortly, so check back soon.

Fun Anecdote With A Great Lesson

I came across this anecdote while having lunch with Matt one day. What is great about this is that it was plastered on the wall of our booth at Jimmy John's, a sandwhich place. This place has the funniest crap on their walls, and sometimes, you'll catch a neat tidbit about life, as we did that day.

Untitled
An American businessman was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellow-fin tuna.

The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied "only a little while".

The American then asked why didn't he stay out longer and catch more fish?

The Mexican said he had enough to support his family's immediate needs.

The American then asked, "but what do you do with the rest of your time?"

The Mexican fisherman said, "I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life, señor."

The American scoffed, "I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually NY where you will run your expanding enterprise."

The Mexican fisherman asked, "But señor, how long will this all take?"

To which the American replied, "15 - 20 years."

"But what then, señor?"

The American laughed and said that's the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich. You would make millions.

"Millions, señor? Then what?"

The American said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos ....."

Author Unkown

It's Been Awhile

I know I haven't made an entry in a while. Well, things have been crazy around here. Work has been about the same but, we are in the process of buying a house. Our first home. We ran around last weekend with our realtor and made an offer shortly thereafter. There are some financial and legal issues surrounding the house we want, so we may not even get it. All that means, we have to keep looking.

Now, this post may be long as it is a response to an article I came across online. You all know, I read a lot. Mainly books and news articles that pertain to finances. I've learned quite a bit and have disagreed with a bit too. So let's get started.

Drowning In Debt
First, there was an article on MSN a couple of days ago, Why young Americans are drowning in debt. The article initially recounts the stories of a college kid who has maxed out her cards and are is longer able to buy books for class. She doesn't make enough money to pay her bills so she's just trying to get by.

Just below her story, the article posted a couple of alarming trends that I am aware of, but some people just haven't been paying attention.

• College costs have increased dramatically.
• Credit cards are marketed aggressively to college students.
• Housing prices have increased faster than inflation.
  

It's no wonder the first major financial decisions most college graduates make is to declare bankruptcy (between the ages of 25 and 34).

Free t-shirt
Most college kids sign up for credit cards on the first day of class. Most don't even know what kind of interest rate their getting much less that benefits. All they know is that they're getting a free t-shirt. Whoopteedoo! Hey, I understand the FREE thing. I used to be a college student.

If you're a college kid, or headed to college soon, make sure you take a look at what you're getting into. That free t-shirt will cost 100 times more than it's worth.

The Lesson
The article closed on an excellent note. "Every high school student in America should have to take some kind of financial-strategy class to learn about everything from banking, credit cards, savings, loans and protection from identity theft..." Now, we just have to find a financial-strategy class that kids will understand and participate in. We don't have to look far.

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Coming next.....Response to the Putting money in its place article by Kevin Eigelbach (Kentucky/Cincinnati Post) about Christian financial planning. Kevin doesn't get it.

Cars, cars, cars

Americans love cars. We are fanatics about our cars. Those stupid things go down in value like a rock. According to Kiplinger's Personal Finance Magazine, cars lose 60% of their value in the first four years. Then, lucky you, you're making car payments for the privilege of losing your butt. It's amazing how many people do this. Most Americans. It's no wonder most Americans are broke.

A car purchase is one of the largest purchases Americans make that go down in value. Ten times out of ten, a car will lose its' value. You can't make money on a car, only minimize the damage to your pocket book.

Stop and Think
People really need to stop and think about the car buying process. Think about what millionaires do. To become a millionaire, you have to do what millionaires do. If you want to be middle class, do what middle class people do. If you want to be poor, do what poor people do.

The typical millionaire in America hasn't had a car payment in seventeen (17) years. I know you're thinking, "yeah, that's 'cause they're millionaires." Actually, no. They became millionaires because they didn't have car payments.

What does that car cost you?
The average car payment in America is $378.00 over 83 months, according to USA Today. If you invest $378.00 from age 25 to 65 in a decent growth stock mutual fund, you would have about $4.4 million dollars! That's an expensive car.

Still want to be a millionaire?
You have to make a decision about how you're going to live. Does this mean you can never have a new car? No. But you have to think about what that car payment is worth. For most Americans, that car payment is costing their kids college fund or retirement, and they are making almost no progress on their student loans.

If you want to win with money, you have to get rid of your car payment. Pretty simple, isn't it?

"There is an inverse relationship between the time spent purchasing luxury items such as cars and clothes and the time spent planning one's financial future."
The Millionaire Next Door

Dave Ramsey, The Financial Guru and Consumer Advocate

In case some of you have been living under a rock, or just not paying attention to the financial/money sections on your news/media sites, Dave Ramsey has been all over the place. First on 60 Minutes, then on Oprah, now on The Early Show every other Tuesday. The guy is just everywhere and if you haven't listened to his radio show, you need to. There are some things you may not agree with, most things you will though. But the guy knows what he's talking about.

I setup a Google Alert so I can get the latest links to any articles that talk about Dave or just mention him. Most of the alerts I've received are merely churches or places announcing the schedule for Financial Peace University, a 13-week financial course taught by, none other than, Dave Ramsey (via video). We're in our 12th week of the program and I have to admit that it has been an excellent course on financial basics. It's the type of financial course for normal, hardworking Joe's that know little about finances and even less about the how-to's of budgeting and paying off debt. The course touches on everything that a household would encounter financially: budgeting, paying off debt, saving, insurance, real estate and mortgages, investing, collector's and credit bureaus and, even giving.

Of course, if you've actually read any of my posts you'd know that I am huge fan of Dave Ramsey. One main reason why I think so highly of this guy: he not only helped us get our finances back in order, but gave us hope for the future. He does this for everyone that does what he teaches. Sure, it's difficult to get a grasp of his concepts initially but once you do, you start to do something that seemed impossible--make progress.

Dave has written a book called the Total Money Makeover that outlines the basic principles to getting out of debt and building wealth. I'll outline them here so you can get an idea of what he teaches. For more in-depth description and application, I recommend you buy the book. And, when you get a chance to, listen to his radio show.

Dave Ramsey's Baby Steps:
Step One
Save $1,000 in an emergency fund

Step Two
Use the debt-snowball to pay off everything but the house

Step Three
Save 3 to 6 months of your household expenses in an emergency fund (same fund as Step One)

Step Four
Put 15% of your monthly income into Roth IRAs or pre-tax investment

Step Five
Start a college fund

Step Six
Pay-off the house

Step Seven
Build wealth in mutual funds, real estate and other investments

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Links/articles about Dave Ramsey:
Winter Tales: Tales of clutter offer cautionary lessons
RockyMountainNews.com

13 Ways to Live Well On Less
MSNmoney

The Anti-Debt Crusader (PDF)
NYtimes.com

Dave Ramsey (Wikipedia)