Mortgage Crisis vs Integrity

There was a great story about the Mortgage Crisis on 60 Minutes. While we have all heard the various issues explained about how much inventory is out there, how many people have been pushed out of their homes due to the ARMs resetting. But something struck me hard while watching the videos.

I have always felt bad for the people who lose their home. We nearly went through it as a kid and it was a horrible experience. There was real shame in being in a nice middle-class neighborhood and really not being able to afford it anymore. However, in the videos a couple were basically saying..."Whatever!"

In the "walking away" video, the couple admits that: they overpaid, they got a ARM knowing it would reset, and that they can pay the new payment after the increase...but they are going to let the house go and be repossessed. When asked by Steve Kroft, "Why?" They basically say that they aren't going to pay that kind of payment for that kind of house. Basically if the investment was working they would continue to pay, but now that is not...Oh well! They will go rent for a few years, get their FICO back up and give 'er a try again!

Maybe we are weird, or it is just the way we believe that you should act, but we would just never do that. If we lost, or gave up our house it would only be after every measure was taken. When we were going through trying to pay all of our medical bills and old debts, a bunch of people (including one of the ladies at the hospital) suggested to really consider bankruptcy, but we believed that we weren't disputing any of the charges, so we had the obligation to repay them.

Maybe some feel it is OK to some because 50% of this (or more) falls on the backs of the lenders giving loans to those with very little hope of paying them back. But for us integrity is blind. I am not saying that if you decide you must go bankrupt you are doing wrong, just that it should be a last, ditch effort. For us it is worth the effort and harm to our budget to try and pay our debts. No matter to whom.

So how about it? Are we just Luddites, and hopelessly out of step with the way the world works?

The Agony of Defeat...

Do you know who Vinko Bogataj is? He was a moderately successful ski jumper for Slovenia in the 1970's. But what he is known for in American is the start of abc's Wide World of Sports. He IS the picture of "The Agony of Defeat."

That is how I am feeling right now...

Just got the ultimate Ninja Bill. We are doing so well, but as I have said before that wasn't always the case. When we moved here in December of 2006 we had a bit of a perfect storm. We were moving, had to cash out all of my options at my old employer, and had a huge medical bill hanging over our head. With no credit left or available and trying to move into a new house, we had only one choice...to tap my 401K. It wasn't much cash, but even with the penalties it was enough to get us moved, into the house and get the bill killed and pay off some really high interest debt. Desperate times Desperate measures... (He's At the gate)

Well today, two days after I filed my taxes, guess what I got...My 1099-R for the withdrawal. I thought it was in my 2006 taxes and didn't even think about it...(He is sliding)

So now I have to file an amended return. The worse part is that I went from having a $5013 Federal Refund to Owing $255! My state return went up $166! So I am still getting money back, about $2400 in total, but all of the Sugarplums dancing in my head just went rancid!- (The agony of defeat indeed!)

We did have taxes pull from the distribution, but the issue was the penalty...Well, now we have to print off a ream of papers worth of returns and get them out. Also given the extra income we will lose some of the Tax Rebate this summer...As Dave Ramsey says, Stupid Tax!

Let this be a cautionary tale for all of you to mind your finances! Or you could have as expensive of a morning that I have...off to cry :(

180 Degrees in Less than 180 Days

Simplicity in Kansas suggested in a comment yesterday, taking a look at a post about how my family has changed since we began our journey together in October. A reflection on five changes I have noticed as we work our Success Map and through the Dave Ramsey Baby Steps.

It hit me immediately as a great idea, since a lot has changed in less than 6 months. In fact, regarding finance, nearly a 180 degree turn-around. It might be easiest to explain by listing some positive advances, and contrasting them to how they were being done before.

Change #1 Bill Paying:

• Then: We haven't had a 30-day late pay in a long time, but it was very close. Basically we paid them as they came in without a plan. This led to silly $20, $30 late charges from the cards. It also lead at times charging a payment to a credit card, or having wave after wave of Ninja Bills.
• Now: We track every bill in MS Money including yearly ones and know exactly when we are going to pay them to maximize cash flow and eliminate late-fees.

Change #2 Spending Habits:

• Then: It kind of used to be first come first served! If I wanted to go Golf, I checked to see which credit card had some credit and I was off. The kids would hit up their Mom for everything with little thought of earning or saving for what they wanted.
• Now: Everyone in the house know where a bill is allocated, down to getting a Tea on the way to work. All of us are on allowances, we can spend it on what we want, but when it is gone, its gone! We try to pay with cash anything that we can...oh yeah, the Credit Cards are chopped and haven't been used in four months!

Change 3# Success Plan:

• Then: Don't worry, we'll always make more money...It will work out. Hey, there is the sand, I am going to be over there with my head in it!
• Now: Each person, including the kids, has a good idea to where the money is going. They know we didn't handle our finances well and we are now cleaning them up. They now know that a budget is a lifestyle, not a prison sentence to be paroled from. We all know that whatever we want...we have to save for it. A great example is with the tax return that we are getting. While questions came up about vacations, etc., when I explained that we were putting it away for taxes, everyone understood why. My oldest daughter told me to find the best interest rate, so there would be more for Christmas! (Both Girls are budding CFOs)

Change #4 Attitude Towards Money:

• Then: When my 10 year old daughter was four, she asked for a credit card for Christmas...so she could shop whenever she wanted.
• Now: Just last weekend she said she never wanted one because it was silly to pay extra just to get it now! Today I was with my 7-year old son at the bank getting the cash for our envelope system and he asked if we could go to McDonald's for lunch...just us two. I said sure, but reminded him that since the family wasn't all there, we each have to use our allowances to pay for our meal, because that was fair. He turned to me and said, well, how about I save this for a Bionicle instead...Good choice Son!

Change #5 Stress:

• Then: Never knowing what would turn up next, always waiting for our next check. Everyday felt like a rainy day.
• Now: Never is everything perfect. But the stress level around money is 10% of what it was. What stress there is really due to our understanding of what opportunities we blew by not having our stuff together...

So looking back we really have turned 180 degrees in less than 180 days. We are not perfect by a long shot but we got a budget, planned out our Success Map, are working our baby steps, built our snowball, and the light at the end of the tunnel isn't a train anymore!

If you haven't started, start. If you stopped, restart. If you are doing well, look for improvement! You can do it!

Carnivals and The Wall Street Journal

There are some really great Carnivals going on out there today, It is making me forget it is Cold outside today!

KCLau.com is running a fantastic Money Tips Carnival. It also features our Top Personal Finance Necessities post. Check it our tons of great articles to help you save money and increase wealth!

Mabel and Harry are running a super Carnival of Leadership Development and were kind enough to include our Performance Review Time post in the mix. I truly believe that working towards growing your career is one of the most important drivers of wealth. Just a 1% difference per year can mean an additional $40K per year during a 30 year career...and that is only that year!

A really exciting thing happened last night...Life, Liberty and the Pursuit of Money's post about Microsoft Buying Yahoo was listed in the Wall Street Journal Blog! It was just a line listing in the "Blog Post about this Topic" section...But Hey! it still counts in my book!

January Month In Review

January is over and it is time to fess up and do a little review.

It was actually a good month with some challenges, a crop of Ninja Bills and staying on track with all of my goals, I even got some great news last night!

High Points:

• Net Worth Increased $1,217 - This is from the debt reduction, got below my minimum that I keep in checking, but this was really artificially low as I was paid Friday and checking is back to normal levels
• Debt Decreased $1,310 - Car come down a chunk and this is the next Snowball debt after my State Farm CC. I am looking forward to no more car payment!
• Did my taxes Friday Night - My rebate is way better then I thought it would be. Between State and Federal I will get back $8037.15! This is good and bad news. The money will go to fully fund Property Taxes for 2008 (due in October) and Christmas 2008. The remainder will go towards Snowball #6 effectively cutting it in half! The bad part is I gave the government a non-interest loan of $8037.15! It was our first year in the house and we had unexpected medical bills as well that we could deduct, so I won't beat myself to bad.

A quick funny story; after I finished the taxes and e-filed then I went to my wife and said with a long face "well, guess how much..." as I poured a cocktail..."Looking that you are pouring a drink, we owe, huh"...I say, "How much do you think?" She says, "Well we have $2200 in savings, so $2300." I say "No, it is a much bigger number..."

"Great" she pauses, "not so much it will make us use our credit cards, we've been so good... (what a turn-around BTW)" I say, "it is $8037.15..." She goes completely white..."What are we gonna do..." I say, well first we are gonna put our 2008 property taxes and Christmas money away and pay off half of debt three :)"

She hits me smiling!..and calls me a jerk...then asks me to run it again :) I pour her one too, and we toast!

Points to Work on:

• Ninja's of my Own Making - Besides two of the kids needing new winter coats, we had a really high Gas bill and Electric Bill. We cut Entertainment and Dining to help pay them, everyone is more motivated to do better! However, I didn't plan for the following...my Mother-in-laws birthday, My step-Fathers Birthday or...my birthday, doh! We did a great job at planning the girls birthday funds in completely slipped my mind to build their gift amounts in to Microsoft Money...Won't make that mistake again. We all chipped in to cover the amounts, but we did go over budget there, effectively erasing other gains.
• Balancing out Payment between check - A bunch of my payments are due when our house payment is, and given that takes most of my check I need to do a better job planning when to pay debts and bills. Built a little tool into my master sheet in Excel to help!
• Got over zealous - Moving money into saving that looked like extra...not so fast Hoss...had to move it back due to NinjaBills and poor income allocation...Doh!

Goals:

• Pay Off StateFarm CC - $2836.22 - Payment is due 2/10 you'll see a good drop next month along with extra payment due to taxes
• Pay Off Car - $4594.87 - Down to $4316, or $280 less!
• Pay Off CC CitiBank Platinum - $8989.16 - Minimums here until the Snowball show comes to town
• Pay off all CC Debt - Working it!
• Save 100% 2008 PropertyTaxes - $5000 - w00t! Should be checked off by the end of the month...ahead of time!
• Keep Snowball 100% Intact - Yo Joe!
• No CC Use - For the Fourth month! Never thought it was possible! Now can't believe it wasn't!
• Increase Average FICO-Score to 720 - Moved from an average of 692.7 across the major three to 699.0, so close to my short-term goal. At one point 5 years ago we had a 510 score! You CAN repair your score, believe me. I check this every month through www.truecredit.com (I am NOT and affiliate - just like the service) For $14.95 a month they monitor and email me any issues with my credit report. In addition I can a report with FICO for each whenever I want, even multiple times a month. For a stat junkie like me it is awesome.
• Stick to Cash Budget System - Yep, and loving it!
• Net Worth increased by $20,000 - Only up $1200 this month, but a lot of pluses coming down the pike. 2008 Tax rebate, Tax Stimulus money (hopefully the Senate doesn't kill it!), my review is Monday and bonus in April...It will be tight, but I believe we can do it!

Well, that is about as full disclosure as I can get. I guess if I am gonna spew advice, the least you can do is see where I am. I am not a financial adviser, just a marketing slub trying to get out of debt and build a bright future just like you using our budget, debt reduction and basic money management to get there...it is a marathon, not a sprint!

(BTW - That pic is a calendar available from Barnes and Noble -thought it fit the article!)

Personal Finance QuickTake: Microsoft to Buy Yahoo

Microsoft made an unsolicited $44.6 Billion bid for Yahoo today. Yahoo's stock has been weak lately as they continue to lose market share to Google and have failed to take advantage of internet advertising.

Microsoft's surprise offer of $31 per share is a 61% premium on where Yahoo's stock ended the day before.

For a while now it has felt like to me that Yahoo lost it's way. A few years ago they had the chance to buy Google for $2 Billion and passed it up, deciding to be a media company that had search as opposed to a search company that was expanding.

Google really had out maneuvered Yahoo, snapping up YouTube, creating and mastering AdSense, buying Blogger and Feedburner. Microsoft, with MSN has never been a serious competitor, but they do have deep pockets and are good at identifying niches that they want to grab market share with. This would be the largest acquisition in Microsoft history!

I think this is a great marriage if it happens, and the stockholders are going to demand it does! This really gives the web community a Pepsi to Googles Coke.

I am NOT anti-Google as I noticed I was sounding a bit, but without competition companies get complacent and innovations slow. I look forward to see what can happen with a strong competitor!

(photo by Reuters)

January's Top Traffic Drivers and Commenters!

January is said and Done! One month down, only 324 shopping days until Christmas '08! Just Kidding. I will be updating the financial portion of the blog as well as finishing my taxes this weekend. But to kick off February I wanted to thank some people.

A young blog like this subsists on older blogs helping out to deliver some of their well earned and won traffic. The new blog needs to earn it, by hopefully putting out good content and winning repeat customers.

Life, Liberty and the Pursuit of Money began really as a lark. I read personal finance blogs and really liked that there was a neat support system out there as well as great ideas to share. So I started this one with little hope anyone would visit, but a determination to get off the sidelines and share. It certainly has followed an old lesson I learned: The more you know, the more you know you don't know! I know more than when I started the blog. I know I will know a ton more later on. Thank you for your patience.

I wanted to recognize the Top 10 Blogs that sent traffic here during January.

Top Traffic Drivers for January

1. The Digerati Life
2. plonkee money
3. Banker Girl
4. Mrs Micah
5. Shoemoney
6. My Open Wallet
7. We're In Debt
8. Green Panda Treehouse
9. Get Rich Slowly
10. Collecting My Cash

I also wanted to thank some people that been Key Commenters! These folk are always there to kick off a conversation and it is appreciated. I wish I could find a good Top Commenter widget for Blogger, but no luck yet. If you see one let me know please!

Top Commenters For January

• CathL from Catherine Lawson's Business Advice
• Mrs M from Mrs Micah
• Ian Denny from Phoenix from the Ashes
• Dawn from Iowa Hippie Chick
• Everyone Else that Commented!

Thank you all very much! Please continue to, or start to, comment! Love everyone's perspective and ideas.

Last but not least...I am also naming one Blog as the Life, Liberty and the Puriut of Money, MVP for January...To be a top commentor is one thing, to be a big traffic contributor another, to be both is amazing...The MVP for January is...Mrs Micah!! Thank you so much!

Doesn't take much to make the list as this is a small, but growing blog, if we can ever do anything for you, please don't hesitate to ask!

Love to see you here at the end of February!