Live Real, Now

The no-pants guide to spending, saving, and thriving in the real world.

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Don’t Screw Future-You

Finance, Life

A conversation between me and my temporally displaced self.
Future Me: Excuse me, Jason?
Me: Yes?
FMe: <Slap!>
Me: May I ask what that was for?
FMe: Of course.
Me: What was that for, jerk?
FMe: That was payback for all of the hell you have put me through.
Me: What?!?  I’ve never even met you, before.
FMe: Of course you have.  I am future-you, and I’m sick of getting screwed by past-me, that is, you.
Me: Huh?
FMe: Listen close.  You’re not  the sharpest brick in the box and I don’t want to explain this twice.
Me: ???
FMe: A long time ago, when you first met our wife, you were dumb.
Me: I don’t appreciate….
FMe: Shut up.  I was dumb then, too.  Remember?  You…err…we bought a new truck, built an addition on our…err…your…err…whomever’s house, got married in the same year.  On top of many other expensive decisions.  Do your recall?
Me: Yes, I do.  So what?
FMe: If that wasn’t enough, you and your smoking-hot bride are still shopping like you’re rich. You drive a new car.  Your kids wear new clothes.  You’ve got a house full of new furniture.  How did you pay for all of that?
Me: Naturally, I charged it.  Zero payments, zero interest for a year!  Pretty smart, huh?
FMe: What happens in a year?
Me: I don’t know.  I’ve got a full year to figure that out.
FMe: <Slap!>  I’ll tell you what happens!  Future-you, that’s me, gets screwed!   Your raise didn’t come through.  You had a baby. The truck broke down.  Your wife took maternity leave.  A roommate moved out.  You took a loss in the stock market.  You didn’t plan!  You had no savings to cover any of those problems because you were too busy servicing debt to pay for your current life.
Me: How was I to know?
FMe: <Slap!>  Life happens!  You never know what is coming next.  You need to plan and save for what might happen.  Otherwise, you’ll just accumulate more debt to be serviced by yours-truly.  That is not acceptable.
Me:  So?  What are you going to do about it?
FMe: <Slap!>
Me: Really?  Again?
FMe: <Slap!>  I’m struggling to pay your debt. Your son starts college next year, but you’ve left me completely unable to help.  Your daughter wants to get married in a couple of years, but the Father-of-the-Bride can’t afford a tux.  My wife, your beatiful bride, wants a vacation that I can’t afford.   You’ve screwed me, dude.
Me: I’m sorry.  What can I do to fix it?
FMe: Buy me dinner, first.
Me: Huh?!?!?
FMe: Stop the excess spending. Spend less than you make, for a change.  No credit.
Me: None?
FMe: None.  Nada.  Zip.  Zilch.  Only spend what you can afford. Budget.  Pay off those nasty bills.  Don’t leave me hanging.
Me: So, what you’re saying is that, if I don’t have the money, I shouldn’t buy it?
FMe: Exactly.  That’s the path to wealth, freedom, and financial independence.  Live in the real world.
Me: Gee, thanks, Future-Me!  Now I know.
FMe: And knowing is half the battle.

What would your future-you have to say to you?

 

Saturday Roundup

Finance, Life, Misc

The float of the King carnival parading in Pat...
Image via Wikipedia

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Holiday weeks are supposed to be short, aren’t they?

I’m 11 days into my 30 Day “Compact”.  So far, it has gone well.  Unfortunately, there have been a couple of books launched that I’d love to own, and a friend keeps showing me new gadgets that I’d love to get.   Not shopping at all is harder than it sounds.

The Best Posts of the Week:

Brian Wood, without a doubt, understood the responsibility he took on as a father.    The story makes me get all misty.

On Wise Bread, they asked if you are saving too much.   Don’t save as an excuse to stop living your life.

Free Money Finance will help you save money on travel.

Parent Hacks has a great use for a Google Voice number.  I have a spare, so I think I’ll start using it.

I’m a big fan of selling on Craigslist.  I’ve never sold a car there, so this was informative.

Finally, a list of the carnivals I’ve participated in:

5 Reasons to Quit Saving and Start Living was included in the Carnival of Personal Finance.

Bonding Relationships was in the Carnival of Wealth.

Hippy Month was the Editor’s Pick in the Festival of Frugality!

If I missed a carnival, please let me know. Thanks to those who have included me!

Refinancing Through the HARP Program

Finance

HARP Refinance

If you owe more than your house is worth, and want to refinance to today’s low interest rates, you need to check out the HARP program. Millions of homeowners with underwater homes are finding relief in a new version of the Home Affordable Refinance Program (HARP). Refinancing to lower interest rates could slash your monthly mortgage payment or shorten the time it takes to pay-off your mortgage.

The new HARP loosened qualification rules, making it it easier for underwater homeowners to qualify for a refinance. When HARP 2.0 was released in November 2011 you had to work with your original lender. Since March 2012, when Fannie Mae and Freddie Mac rolled out the automated underwriting systems, you can work with any participating HARP lender. That means more competition for your business and better rates for you

HARP 2.0’s Hurdles

There are two series of hurdles you must clear before you can refinance your loan under HARP 2.0. The first set of hurdles concerns the loan itself. The three key eligibility questions are:

  1. Is the loan owned by Fannie Mae or Freddie Mac?
  2. If so, was the loan purchased by Fannie or Freddie on or before May 31, 2009?
  3. The loan was not refinanced under HARP before (some exceptions apply).

If you answer yes to these three questions, then your loan may be eligible for HARP.

Tip: If your loan is a FHA loan, then check out a FHA streamline refinance loan.

The second set of hurdles concerns your finances and property. Fannie Mae and Freddie Mac set up the basic guidelines. There are two basic ways your loan can be processed:

  1. Manual Underwriting System: Only your original lender (who is also your current servicer) can process a HARP loan through the manual underwriting system.
  2. Automated Underwriting System: Any participating lender can process a HARP loan through the automated system.

Keep in mind that lenders are free to have stricter qualifying rules than the basic Fannie and Freddie requirements.

When shopping for a HARP loan, here are some of the main points to look out for:

  • Credit Score Requirements: Fannie and Freddie have no minimum FICO score requirements. However, each lender has its own credit score requirements, so if you are denied by one lender, keep shopping.
  • Income Requirements: Your original lender can approve a loan with no debt to income ratio (DTI) requirement. However other lenders must qualify you based on  your DTI. The rule-of-thumb for a HARP loan is a 45% maximum DTI.
  • Timely Mortgage Payments: The HARP program allows for no late mortgage payments in the last 6 months and one late (30 days) payment in the preceding 6 months. However, some lenders do not allow any late payments.
  • Investment Properties Qualify: You can refinance a second home or rental property under HARP 2.0.
  • Fees: Lenders are not consistent in the fees or the interest rates they charge for HARP 2.0 loans. Some lenders charge a few hundred dollars for HARP 2.0 loan fees, and others charge thousands. It pays to shop around, so you can compare interest rates and fees.
  • Condos: While HARP guidelines for condos are tricky, many more condo owners will qualify for a loan under HARP 2.0 than under the first version of HARP.

Applying for HARP
First, go to the Fannie Mae and Freddie Mac Web sites to learn if either owns your loan and whether they bought your loan on or before May 31, 2009. If so, you can contact either your current mortgage servicer or shop around with the many lenders who are offering the HARP 2.0 loan. 

If your application is rejected, ask for the specific reason why. If you applied with your original lender, find out whether the lender used the manual or automated system. Request manual underwriting if your original lender turned you down based on automated underwriting, as it may result in your loan being approved.

It pays to shop for HARP 2.0 refinance. Many homeowners report one lender will reject their application, but another will offer them an attractive refinance. Second, lenders are not consistent in their offers. As mentioned, closing costs are all over the map. Interest rates vary, too.

Summary
HARP 2.0’s rules are technical. Each lender creates different overlays. If you believe you qualify for HARP 2.0, be persistent! The rules that are in place today could very well be expanded in the future. This is one instance in life where shopping can be the solution to your problem.

Quit Smoking: My First Frugal Move…Ever

Finance, Life

Lit cigarette
Image via Wikipedia

It’s nearly the 5 year anniversary of my last cigarette, so I though I’d bring this post back to the front page. 

A bit over three years ago, we found out that my wife was pregnant with baby #3.    When we decided to have #2, it took us two years of trying.  Naturally, we assumed we’d have the same issues with #3.   Imagine our surprise when it only took 2 weeks.   At that point, we were getting ready to celebrate brat #2’s first birthday.

That mean’s 2 kids under 2.   Two kids in diapers.  Three kids in daycare.  Baby formula again.

We weren’t making ends meet with two kids, how were we going to manage three?  I dropped my pack-or-two-a-day smoking habit.

But, I’ve gone over that before.

This post is about how I actually quit.

Some Facts About Me

I don’t do things by halves; I tend to do things all the way or not at all.    For years, my wife would ask me to cut back, to just smoke a little less, but that never worked.   If I had cigarettes, I smoked them. I always had cigarettes.    When I eat, I eat.  I’ve never managed smaller portions.    I used to drink a case of soda each week, just because it was there.   Moderation has never been my friend.

As a corollary, I don’t cheat. At anything.  Ever.   Because of the above fact about myself.    I don’t moderate myself when I give myself rules either.   If I draw a line, I obsessively avoid crossing it.

The problem comes when I try to give myself a “gray area” rule.    “Smoke less” always leaves room for “just one more”, which easily leads to “I only cut out one cigarette yesterday, so what’s the use?”   I had to be done.

After smoking for fifteen years–more than a pack a day for at least 12 of those–that’s an intimidating thought.

The Plan

The first thing I did was set a day to quit.  I chose the day after my Halloween party.   Before that would have been setting myself up for failure.   Booze, food, and long conversations in a smoking-friendly environment were just 3 of my many triggers.    I always smoked more at my parties, so the day after, I didn’t feel up to smoking much, anyway.   I’d just ride that wave of “I don’t feel like it” to to holy city of “I quit”.

I didn’t quit smoking the next day, I just quit buying cigarettes.  That left me half a pack to curb my cravings.

I also knew that nicotine cravings are about the most distracting thing I’ve ever had to deal with.   That doesn’t make for a productive computer programmer, so I bought a box of the generic patch that Target carries.   I started with Phase 2, because I wasn’t interested in prolonging the process.   I just didn’t want to spend my work days thinking about smoking instead of designing software.  I needed something to take the edge off, without actually smoking.

My plan was to have the patch at work, so I’d be able to work and to stretch those last 10 cigarettes out, as long as possible.

The Result

It worked.   The pack lasted 4 days, I think.   I smoked during my commute and after dinner.   I used the patch only when the cravings got to the point that I couldn’t concentrate.  After a week, I stopped using it at all.   A few days later, I had a particularly stressful day and cheated.    I took 3 puffs of that cigarette and threw it away, because it tasted like crap and I wasn’t enjoying it.  That’s when I knew I was successfully done smoking.    It was a 10 day variation of “cold turkey”.    More than 3 years later, I have an occasional cigar, but never due to a craving.  The day I experience a nicotine craving is the day I burn my humidor.

That’s how I quite smoking, strictly to try to get my finances in line.  That has saved me at least $10,000 over the last 3 years.

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How to Deal with Debt While You’re Out of a Job

Finance

This is a guest post from Marc Chase of My Credit Group.

Dealing with a lot of unpaid debt can be a hassle on its own.  Having to pay those debts when you don’t even have a job to provide you with the money to do so can be a nightmare.  While you’re hunting for a job to help make ends meet, your debts continue to pile up, leaving you scrambling to find a way to take care of them before they cause you to slip further into the poor house, and leave your finances needing credit repair services.

Since you’re likely more concerned about finding a job than anything else, we put together this handy checklist of what you should do to avoid your unpaid bills and debts getting the best of you while you search for a new job.

•     Apply for unemployment benefits. This should be your first order of business after you’ve lost your job, especially if you’re one of the many Americans currently living paycheck to paycheck.  Unemployment benefits go a long way towards helping consumers stay on top of their bills and credit accounts.  Don’t make the mistake of thinking another job is just around the corner – there’s a good chance you can’t afford to wait.

•    Keep paying the minimum balance. If you’re on the verge of drowning completely in unpaid debt, you may be tempted to stop paying your bills completely, at least until you get some additional funds in your account.  Do this, and you’ll find yourself in need of credit score repair before you even get that call back for a follow-up interview.

Instead, do everything you can to at least pay the minimum balance on all of your credit accounts and bills.  This will ensure that your credit history doesn’t take too much of a beating, and saves you from paying even more in interest fees down the line.

•     Stop spending money like you have it. Because the sad truth is, while you’re still unemployed, you likely don’t have a lot of money to spare.  If you’re still living your life as though you can afford to pay for everything – eating lunch and/or dinner out more than twice a week, generally buying things you don’t NEED – now’s the time to stop.

Stop charging every purchase you make to your credit card – break them out only in an emergency.  This will help keep you from sinking further into debt while you’re out looking for a way to pay for your purchases.

•     Eliminate and prioritize your bills. Now’s a great time to take a long look at some of the bills you’re paying, and deciding if they’re even worth the service.  That doesn’t mean you should stop paying bills you consider “less important” than others; it means looking at some of the things that might have once been necessities (a land phone line if you primarily use a cell phone, a full package TV cable bill, etc.) and re-evaluating your stance on how important they are now that you can’t afford them all.  In many cases, you can get in contact with your service provider(s) and talk about ways to reduce your bill (say, cancel cable but keep internet).

This is a guest post from Marc Chase, President of Product Development for My Credit Group, a website dedicated to helping consumers with managing their credit.

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You’re Gonna Die, Part 1

Life

Death of a surrealist soldier
Image by funadium via Flickr

If you knew you were going to die tomorrow, what would you do today? How would you spend your last hours?  Would you go skydiving before the chance evaporated forever, or would you spend the day talking with your loved ones?

If you knew you would die in a month, what would you do?  Would you plan a trip to the one place in the world you’ve always wanted to see?  Would you look up all the friends you’ve been too busy to see?

What would you regret?  Is there something you have always wished you’d done, but have put off for some reason or another?  Do you want to write a novel, or backpack Europe, or watch a shuttle launch?   Far more people regret opportunities missed than those they’ve taken.  If there is something that you could do that would let you die happy, take steps today to make that a reality.  Remember that you are probably not going to die in a day or a month, but don’t let your entire life slip away without doing the things that matter most to you.

Our lives are short.  Far too short to waste time on the things that add no value.  Everything you do should advance your happiness, either short-term or long.  That doesn’t mean you should waste your life pursuing hedonism.  Lives need meaning.  Chase that meaning.

Find out what gives your life meaning.  What do you do that lets you go to bed with a smile on your face?  Those are the activities that you should maximize.  What is wasting your time?  You can probably shut off the news and never miss it.   It’s just too much information that doesn’t add anything to your life.   Does obsessing over Charlie Sheen’s latest antics ad any value to your life?   Take that time and write a screenplay, take a walk, smell a flower, hug your kids, anything that provides actual value for you.  Don’t waste your life on meaningless activities that do nothing more than kill time.  Time is the one thing we have that we will not get back.

Many people go to their deathbeds thinking, “I wish I had X.”  What is your X?  What would you wish you had done?

 

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