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The Evils of a Reverse Mortgage

Image via Wikipedia

Picture it: Sicily, 1922.

Sorry, wrong channel. Let’s try again.

Picture it: 20, 30, 50 years from now. You’re old. The money you’ve been failing to save so you could stock up on Fritos and obsolete video game consoles(to survive the zombie apocalypse in style) would come in handy about now, since the end of the world never happened. Note to self: Never trust an ancient Mayan.

You’re 70, with no savings and no income aside from the Social Security check that hasn’t been adjusted for inflation since the Palin(Bristol) administration.

But you own your house and that nice young man down at Yersk Rude Bank recommended a reverse mortgage. That could give you all of the money you need to live a comfortable retirement and pay for a bit of a funeral.

Right?

Nazzofast.

Of all of the possible social security strategies, this is one of the worst.

What is a reverse mortgage?

In a traditional mortgage, you’re given a chunk of money guaranteed by your home. You have to pay that money back over time, or you’ll lose your house. In a reverse mortgage, you’re still converting your home’s equity into cash, but you don’t have to pay it back until you die or move, including moving into a nursing home. You are effectively abandoning future-house in exchange for now-money.

Who qualifies for a reverse mortgage?

If you are 62 or older, and live in a home you own, you qualify. Credit and income are not considered.

Why would you want a reverse mortgage?

If money is tight and you have no prospects, a reverse mortgage may be a valid consideration. A better consideration would be to take out a traditional loan and make monthly payments out of that lump sum, or sell your house outright and move someplace more affordable.

What are the downsides of a reverse mortgage?

You lose your house. Technically, your heirs lose your house. A reverse mortgage becomes due when you die. If your heirs can’t cover the loan, the house will be foreclosed. Also, this is a loan. It accumulates interest, even if you aren’t paying it back. If you borrow $200,000 and die in 10 years, your estate may owe $400,000 on the reverse mortgage. If this is a treasured family home, losing it could come as a shocking blow at a time when your family would already be reeling from the loss of, well, you.

What if you really don’t like your heirs?

I’d still recommend getting a traditional mortgage. You can throw a killer party and then, you’ll rebuild equity over time. That way, if you live longer than you expect, you can refinance and throw another killer party. If you go this route, don’t invite the kids, but be sure to hire a videographer so they can see how you’re spending their inheritance.

I’m not a banker or a financial advisor, but I’d recommend against a reverse mortgage in almost all circumstances.

How about you? Would you get one, or recommend one? What’s your preferred method to hurt your ungrateful heirs?

Time vs Money

Finance, Life

A queue in front of a shop - a common sight in... — Image via Wikipedia

In this corner, weighing in at the only thing you have in this life that you can’t possibly get more of: Time!

And in this corner, weighing in at the thing people think they need to be happy: Money!

Keep it clean. No biting, scratching or hitting your opponents with a chair unless my back is turned. Fight!

Yesterday was Jimmy John’s customer appreciation day. They had subs for $1, but you had to go there in person to get it. At noon, there were more than 50 people standing in line. If it takes 1 minute to make a sandwich, that’s almost an hour in line. To save $5.

Good for Jimmy John’s. They brought thousands of extra people into the restaurant and had a huge line running down the sidewalk. That makes them look great to everyone driving by.

But, the people? Really? Would you work, at any job, for anyone(excluding charitable work) for $5 per hour?

Round 1: Time!

My mother-in-law regularly drive 6 miles out of her way to save 5 cent per gallon on gas. If usually takes 10-15 minutes to get there, if the stoplights behave and traffic is decent. If she arrive with her gas gauge on “E”, she gets to put 15 gallons of gas in her car, for a savings of 75 cents. That’s an effective rate of $2.25 per hour, not counting the gas used to drive there. However, if I ask her to give her $2 to stand in her driveway doing nothing for an hour, she looks at me like I’m nuts!

Round 2: Time!

My wife will occasionally make a shopping list that includes coupons and items spanning three grocery stores. If that were to happen, there would be an extra hour wasted, just traveling between the stores, minimum. Then another hour wasted walking past the items in the first store that were slated to be purchased at the second, or third store. Add another 15 minutes per store to check out, and we’re looking at 2 and a half hours down the tubes to save a possible $20?

No freaking way.

Round 3: Time!

My time is valuable. No matter what I do, or how hard I work, I can never get more than my allotment. Why would I waste it to save a fraction of what I can earn by using it in other ways?

And the winner is….Time!

What’s the craziest thing you’ve done to save a few bucks?

Why I Hate Payday Loans

Finance

I hate payday loans and payday lenders.

The way a way a payday loan works is that you go into a payday lender and you sign a check for the amount you want to borrow, plus their fee. They give you money that you don’t have to pay back until payday. It’s generally a two-week loan.

Now, this two week loan comes with a fee, so if you want to borrow $100, they’ll charge you a $25 fee, plus a percent of the total loan, so for that $100 loan, you’ll have to pay back $128.28.

That’s only 28% of actual interest; that’s not terrible. However, if you prorate that to figure the APR, which is what everyone means when they say “I’ve got a 7% interest rate”, it comes out to 737%. That’s nuts.

They are a very bad financial plan.

Those loans may save you from an overdraft fee, but they’ll cost almost as much as an overdraft fee, and the way they are rigged–with high fees, due on payday–you’re more likely to need another one soon. They are structured to keep you from ever getting out from under the payday loan cycle.

For those reasons, I consider payday loan companies to be slimy. Look at any of their sites. Almost none are upfront about the total cost of the loan.

So I don’t take their ads. When an advertiser contacts me, my rate sheet says very clealy that I will not take payday loan ads. The reason for that is–in my mind–when I accept an advertiser, I am–in some form–endorsing that company, or at least, I am agreeing that they are a legitimate business and I am helping them conduct that business.

In all of the time I’ve been taking ads, I’ve made exactly one exception to that rule. On the front page of that advertiser’s website, they had the prorated APR in bright, bold red letters. It was still a really bad deal, but with that level of disclosure, I felt comfortable that nobody would click through and sign up without knowing what they were getting into. That was a payday lender with integrity, as oxymoronic as that sounds.

Can EverQuest Next Compete with World of Warcraft?

News

Legions of MMORPGs have graced the internet to do battle against Blizzard’s World of Warcraft, yet no challenger has bested

everquestnext_human (Photo credit: NewGameNetwork)

Blizzard’s massively multiplayer online juggernaut. Huge marketing campaigns and years of development by the makers of games like Star Wars: The Old Republic and Rift have left players less than satisfied, with an initial big burst of player excitement and eventual failure.

Every software developer that creates an MMO that tries to take a slice of Blizzard’s pie invariably ends up as a “free to play” model. The latest MMORPG slated to try and take a shot at fighting Blizzard’s dominance is EverQuest Next. The developers are looking to lure players to EverQuest from a variety of other games such as EVE Online and Warcraft, but the design of the game seems to straddle a few different genres.

As with other game releases, the developers at Sony Online Entertainment have tried to suggest that their game will be “new” and “different.” It’s not difficult to understand why skepticism is high. Every game that has seen release in the past few years has had developers boast the same and has crashed and burned just a month or so after the release.

Players of EverQuest Next will find a game focus that includes some familiar fantasy elements of an MMO game (like elves), but developers have sought to step away from the traditional, linear questing experience and offer some world-building opportunities for players (much like EVE Online). One of the interesting features expected of the game is the ability for players to impact permanent change upon the landscape.

For example, during wartime a player might decide to build a wall somewhere, and he or she can accomplish this and actually have that wall erected as a permanent feature in the game world. Similarly, when players fight one another or monsters, a spell or explosion that creates a hole in the world will remain permanently. One of the developers likened this feature to the idea of putting Minecraft into an MMORPG.

Although absolutely everything in the world can’t be destroyed (certain structures will be permanent), this opportunity to build, create, and destroy represents a jump forward from the same opportunities players have had in games like EVE Online. World of Warcraft has occasionally offered players the opportunity to change the landscape, but not on a regular basis. Such changes have generally been implemented after a reset with all the realms taken offline, after which players would log in and see the changes.

However, the lack of appreciable impact on the environment hasn’t stopped players from flocking to World of Warcraft for nearly a decade, and EverQuest Next will need to bring an amazing player experience to lure away current players as well as retain them. The ebb and flow of Warcraft’s player base often coincides with the new release of another MMORPG, but after a month or so the new game’s servers are ghost towns. It won’t take long to see whether EverQuest Next can compete with World of Warcraft.

Diana Nyad: Never Give Up

News

Diana Nyad, a 64-year-old endurance swimmer, became the first person to swim the 110 mile distance from Cuba to Key West Florida. Certainly, the environmental factors were in her favor as the sea life did not bother her,

Diana Nyad at TEDMED2011 (Photo credit: Klick Pharma)

the currents stayed friendly, and no storms approached. She swam for over fifty-two hours straight before reaching the coast of Florida.

After her long, treacherous journey across the ocean, her words of advice to others were “I have three messages. One is we should never, ever give up. Two is you never are too old to chase your dreams. Three is it looks like a solitary sport, but it takes a team.” Surely, just as a physical sport requires will-power and endurance not to “throw in the towel” or give up, life also requires this same type of endurance.

We are all running an endurance race of life in which we must preserver when trials arise. In order to succeed in this, we must never look back at past failures, but rather press forward to the reward. Just as people running a foot face are running with intense focus on the goal (to cross the finish line and win the metal), people with purpose are also running this race of life, in which they are looking forward to a reward beyond our human comprehension.

In addition, just as Diana Nyad said that one is never too old to chase his or her dreams, a person should never look at age as a determinant of wisdom or faith in life. This is undoubtedly true in regards to children and their innocent, child-like faith that is unpolluted by experience and unspotted by the knowledge of the evilness that exists all around us in this world.

On the other hand, the older people should not possess a mind-set that limits their ability to stay active in life. As soon as a person determines in his or her head or listens to outside voices telling him or her that he or she cannot do something because of advanced age, he or she has a tendency to live out these thoughts and these thoughts create feelings of defeat. Ultimately, people should keep a child-like faith with an optimistic, determined thought pattern in life. This will surely create better overall mental health and therefore more productivity.

Just as Diana Nyad pointed out that her endurance swim could not have been successfully accomplished without a team, people need positive fellowship in life. When a person is discouraged, having somebody to embrace him or her in a hug and simply offer words of encouragement can greatly leave a positive impact on the soul. When one person is strong in an area, the next person is possibly weak in that same area. We are all unique and have different strengths that we can bring to the community. If everybody shared their time and gifts with their neighbor, this life would be much simpler.

Unfortunately, many “sharks” exist amongst people that are looking for somebody to gnash with their teeth, torture, and devour. It is often said that a shark can “smell fear” and thus responds in a negative matter to fear. Diana Nyad did not focus on the sharks, therefore did not display fear nor was she approached by any dangerous predators. Instead, she focused on the shore, not looking to her right or left. In life, if we do not pay the “sharks” any attention, they will most likely not notice or approach us.

We can learn much from Diana Nyad’s example of her “Never Give Up” endurance swim.

Indio Downey: The Cost of Drug Addiction

Celebrities

Indio Falconer Downey, the son of actor Robert Downey Jr., was arrested Sunday, June 29, 2014 on drug possession charges. At the time of his arrest, Indio was a passenger in a vehicle that was stopped around 2 PM. At the time of the traffic stop, Indio was found to have what appeared to be cocaine as well as a smoking pipe. He posted bail around 9 PM that evening and was released.

Actor Robert Downey Jr. photographed by the Ca... — Actor Robert Downey Jr. photographed by the California Department of Corrections (Photo credit: Wikipedia)

Father’s Drug Problems

Indio’s father had many well-publicized drug addiction problems throughout the 1990s, attending a number of rehab facilities in an attempt to beat his drug addiction. The 49-year old actor says he was introduced to drugs by his father at the age of eight, and by 20 was a full-fledged addict. Just two years after Indio was born in 1994, the actor was stopped by police driving his Porsche on Sunset Boulevard naked and in possession of cocaine, heroin and a .357 Magnum. Just days before he was due to be charged for those crimes, he was arrested after being found passed out in a neighbor’s home. Indio’s father spent 12 months in prison and, in 2000, when Indio was six, Robert Downey Jr. was arrested in a Palm Springs hotel room with cocaine and wearing a Wonder Woman Costume. Before a preliminary hearing could be held on the charges, Indio’s father was arrested for being under the influence of an undisclosed stimulant. Indio’s mother, Deborah Falconer, divorced his father in 2004.

Indio’s Drug Abuse

According to reports, Indio’s father has been helping his son deal with addiction problems for many years. Indio has been in and out of treatment centers, and some reports say he had remained clean and sober for some time, in some part due to his father’s counseling. In 2013, there were reports that Indio was being treated for a “pill problem,” which his mother claimed was not a significant problem. According to Deborah Falconer, Indio was taking “one pill a day” and that he was not addicted. She said Indio was being treated with “holistic, natural and orthomolecular therapy.” After Indio’s arrest on Sunday, however, Robert thanked the Sheriff’s Department for their intervention, stating that there was a “genetic component to addiction” and that “Indio likely inherited it.” Robert has been clean and sober since late 2001.

Children of Addicts

One of the unknown costs of addiction is that children of addicts are eight times more likely to develop an addiction than those whose parents are not addicts. Many studies have confirmed that addiction is a combination of genetics and poor coping skills. In addition, sons of addicted fathers are four times more at risk for developing an addiction than the sons of non-addicted fathers. Much of this is because addicted parents often lack the ability to provide structure or discipline, and the sons of addicted fathers receive harsher discipline than those of non-addicted fathers. These statistics clearly show that the cost of addiction on offspring is high, and indicates why Indio may have turned to substance abuse.

It is clear that this recent arrest shows that Indio may be facing an escalating drug problem, similar to what his father faced in the 1990s. After seeing his father as an addict, as well as the well-known genetic connection regarding addiction, Indio may need intensive therapy in order to fight his addictions.

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