Debt Free Adventure

Debt is a nasty creature and if you’re fighting it, you should check out the site Debt Free Adventure, authored by Matt Jabs. As you can tell from his about page and twitter profile, Matt takes a biblical view on the principles of debt reduction and financial stewardship.

The Bible doesn’t hold debt in very high regard and neither does Matt, although he’s found himself in credit card debt two different times in his life (once during the college years, and then later when married and his spouse lost her job). Matt shares how they are overcoming the burden of debt on his blog and also shares his personal finance stories as a contributor over at FiveCentNickel.

About Matt

Matt will celebrate an anniversary pretty soon, his site will be one year old in January! He’s come a long way in that time as he explains on his “about” page:

In less than a year I have: lost 40 pounds, defined my passions and long term goals, slashed my expenses, paid off over $4,000 in debt, saved over $2,000, created a lucrative side business – which you are reading at this very moment, and renewed my faith and commitment to being a good steward of what I have been given.

Recent Articles on Debt Free Adventure

Here are other posts from around the personal finance web:

Homes and Mortgages

Holidays

Career and Work

Budgeting & Investing

Personal Finance

Thanks to the following sites for including our posts:

Posted on December 1st, 2009 in Personal Finance | 2 Comments

Written by Ben Edwards · Filed Under Personal Finance 

Reverse Mortgage Disadvantages

Reverse Mortgage Disadvantages

Reverse mortgages were the topic of a post several weeks ago in which we promised to take a look at the downsides of seniors using a reverse mortgage in retirement. Here are some of the disadvantages of using a reverse mortgage to borrow against the equity in a home.

Builds up Debt

Traditional mortgages allow you to purchase a home using financing. As you make monthly payments on the mortgage, you start to pay down on the principal balance you owe. Over time, this decreases your debt amount. A reverse mortgage, however, is the direct opposite. It takes a home that you own free and clear of any debts and creates a new debt on the home.

Significant Upfront Costs

All mortgages have some types of fees and costs associated with establishing them. Most reverse mortgage adversaries claim that the fees and costs of establishing a reverse mortgage are significantly higher. Since many retirees establish a reverse mortgage to provide them with more income, having to pay what potentially adds up to thousands of dollars to establish a reverse mortgage may negate the benefits of the intended purpose of a reverse mortgage.

Decreases Assets to Heirs

If you have children, grandchildren or others you want to leave your assets to, a reverse mortgage may not be for you. A reverse mortgage decreases the amount of equity you have in your home, which directly affects the overall value of your estate. A reverse mortgage does not remove the possibility of leaving your home to your heirs, but your heirs are left with the responsibility of refinancing or paying off the reverse mortgage debt. The other option is for them to sell the home, pay off the existing reverse mortgage debt, assuming they can sell the home for at least the amount owed.

Can Make You Ineligible for Low-Income Assistance

Income from a reverse mortgage can affect your eligibility to receive low-income assistance from the federal or state government such as Medicaid. Check with the agency you’re receiving support from to see if the income from a reverse mortgage may adversely affect this income. Generally, this does not apply to Social Security income and Medicare coverage, but if you receive other types of income, make sure you’ll continue to receive this money if you take out a reverse mortgage.

Restricts Options to Move

A reverse mortgage uses your home as collateral for the mortgage. Since a reverse mortgage requires the home is your primary residence, this restricts your ability to move out of the home while you have a reverse mortgage. Reverse mortgages used as a short-term loan option may end up costing you more than you gain. With the high upfront closing costs, if you move out of the home soon after establishing a reverse mortgage, then you typically do not recoup the upfront costs–meaning you’re losing more than you’re gaining.

Can reverse mortgages be beneficial? Yes. Can reverse mortgages leave you with disadvantages that outweigh the advantages? Absolutely. Be sure to consider the disadvantages of a reverse mortgage carefully before choosing to use one as part of a retirement strategy for you or your parents.

Reverse Mortgage Guide
If you want to know more about reverse mortgages you can also check out a report by Quicken Loans, a branch of Intuit (the companies that creates the software products TurboTax, Quicken, and QuickBooks), that goes into much more depth about who reverse mortgages are right for.

The free guide answers covers topics and questions such as who qualifies for a reverse mortgage, the different types of reverse mortgage options, how a reverse mortgage works, and how much money you can get. Get the free report

Reverse Mortgage Disadvantages
Posted on November 28th, 2009 in Mortgage, Real Estate, Retirement | 14 Comments

Written by Kristie · Filed Under Mortgage, Real Estate, Retirement 

PocketSmith User Review

PocketSmith is an online personal finance software tool that uses a calendar based approach to planning your finances.  One of the PocketSmith co-founders, Francois Bondiguel, asked me if I’d like to try out the software and write up a PocketSmith review. 

Since I have too much on my plate already I declined. However, since I think the concept behind PocketSmith is a pretty useful one I asked Francois if there were any current users I could interview about their experience with the software.

Francois introduced me to Sam Law, a member of the original beta test group from New Zealand that has given the PocketSmith founders an enormous amount of feedback and helped shape the direction of the personal finance software.  Here are the questions I had for him and his answers:

1) Tell us more about the beta test group and the role it’s played in adding functionality to PocketSmith.
The guys at PocketSmith have certainly made sure their users play a big part in where the tool could go, it’s great to get the warm fuzzy feeling of suggesting something then seeing it in the application a number of days/weeks later.

I’m probably simultaneously the best/worst customer for any software company, having worked in a web-based software company, but it really gave me the ability to articulate the things I didn’t like about the software, to make it really easy to get the point across.

During the beta it was a regular occurrence to see multiple updates a week, adding and improving new functionality as well as fixing the occasional bug, and now that it’s open and paid for they’ve implemented UserVoice which means the customer base can directly suggest and vote on new ideas for the tool, which personally I love.

2) What features of PocketSmith do you tell your friends & family about?
The ability to forecast into the future, it’s the key reason I love Pocketsmith; I’m yet to see any other tool do it properly. I’m the budgeting type, as an example to decide whether to make my lunch at home or buy it at work I added each option into Pocketsmith. The fact I can see a literal saving after a year (by comparing my balance with each option) makes me much more likely to action it, instead of a vague “well it will save me money to do option A…”

I’ve actually got to the point now where I don’t check my bank account to know how much money I have, I just check my Pocketsmith account.

3) What PocketSmith feature could use some improving or enhancing?
The option to upload your bank account statement to match actual transactions against budgeted. The reason I have an issue with it is less the fault of PocketSmith and more the fact that my bank doesn’t export details in any sort of easily discernible format, and to make matters worse, multiple banks display things a different way.

I’d love to be able to have it automatically pull in bank details, but in New Zealand (where I am) our banks don’t yet have that ability. (or at least I’m not aware of anyone able to use it other than Xero, and that costs a large fee).

Certainly it could be made more user friendly, but it’s less of a concern with me because I’m more into the ability to forecast instead of analyze.

4) PocketSmith has three different plans: Free, Premium, & Super. Which one do you use? Have you been in the same plan the whole time?
Something I love about the plans is instead of just deciding on them, they actually sent out a 10 minute what/if form that influenced the plans, ensuring there was something that fit most of their users. Originally I sat on Premium because I wanted a years forecasting and I have a lot of events in my calenders, but I’ve now switched up to Super after adding in all my accounts at different financial organisations.

I’m super happy with the pricing, I use PocketSmith to look after all my finances so the figure is minute in comparison to the time it saves me not having to wrange something in Excel (what I used to use)

5) Have you tried some of the other online personal finance tools, like Mint.com and Wesabe.com?   How do they compare to PocketSmith?
Mint.com I’m not actually able to use because I’m in New Zealand, which is a shame because it looks amazing, I actually use Wesabe alongside PocketSmith at the moment. I actually see them as categorically different tools to me, at least in how I use them. PocketSmith is for looking into the future, Wesabe is about looking into the past.

I certainly think with very little effort PocketSmith could improve upon Wesabe’s functionality, especially after Wesabe burned their users by removing 90% of the functionality that made the tool useful (grr!).

6) Have you used any of the mobile functionality like the mobile app, twitter updates, and text messaging?
I have used the mobile app, and I think it’s great for keeping up to date with everything on the go. As for twitter/text messaging I haven’t really used it a whole lot because I’m always close to a full computer.

I would certainly use the mobile app more, but New Zealand has a very uncompetitive market on data, and at $1 per day for only 10mb of data, it’s just too cost prohibitive (when you take into account the fact I would use it multiple times a day).

7) Any final words for people that are considering giving PocketSmith a try?
If you’re like me and you need something that can tell you where you will be financially in 6 months, then PocketSmith is hands down the best tool you’ll find, depending on your needs it could be absolutely free, but even if you have to pay, time is money and PocketSmith saves a lot of it.

Thanks to Sam Law for his review of the PocketSmith personal finance software! If you’d like to check out the free version click here.

Posted on November 27th, 2009 in Personal Finance | 4 Comments

Written by Ben Edwards · Filed Under Personal Finance 

Thanksgiving – 24 Daily Thankful Moments

Thanksgiving seemed the perfect time for me to look at things that I complain about in my daily life and to instead look for reasons to be thankful for them.

What I did was break down a day into 1 hour chunks, look at something I typically complain about in each of those time slots, and then find something about it to be thankful for. Check out the video below and share in the comments what you’re thankful for!

24 Daily Thankful Moments

Posted on November 26th, 2009 in Personal Finance | 1 Comment

Written by Ben Edwards · Filed Under Personal Finance 

TradeKing New Account Overview

The Tradeking promotion that runs through the end of the month reminded me of a conversation I had with a co-worker last Spring about online brokerage accounts. She’s from a different generation and doesn’t feel comfortable opening a stock trading account on the Internet.

Her son suggested she open her own account but she had the whole process built up in her mind to be too complex for her to ever understand. I told her I’d put together an overview of the account opening process to show her that’s it’s really not that complicated.

I went through in the Spring and took screen captures of opening a TradeKing account but then we had a baby so I’ve been a little distracted since then. Anyhow, here is a visual walkthrough of opening an account and the 10 main questions you have to answer to complete to an application for their online brokerage account.

  1. What’s Your Basic Info?
    2. TradeKing

  2. What Will Be Your Secure Code?

    3. TradeKing

  3. Which Type of Account?

    4. TradekingOpenAccount

  4. Who Are You?

    5. TradekingAccountSignup

  5. Where Do You Work?

    6. TradeKingApplication

  6. How Much Money Do You Have & What is Your Trading Experience?

    7. TradekingSetupAccount

  7. Do You Have a TradeKing Promotional Code & What Are Your Affiliations?

    8. TradeKingPromotionCode

  8. What Are Your Investment Goals?

    9. TradekingInvestmentObjective

  9. Do You Agree To Follow the Rules?

    10. TradekingCustomerAgreement
    TradeKing_NasdaqSubscriberAgreement
    TradeKing_OptionsPricing

  10. Give Your Electronic Signature

    11. TradeKingSignature

  11. TradeKing Application Complete!

    12. TradekingWelcome

Of course, opening an account’s not so bad; it’s actually the easy part. Setting your investing strategy & buying and selling stocks is where the uncertainty comes in. To open a TradeKing account, click here.

Posted on November 24th, 2009 in Investing, Stocks, tradeking | Comments Off on TradeKing New Account Overview

Written by Ben Edwards · Filed Under Investing, Stocks, tradeking 

Black Friday & Christmas Shopping Tips

I was looking back through the posts on the site from last November and saw a bunch of posts on Christmas shopping, Black Friday, etc.  The shopping season is here again so here are some tips on budgeting, shopping, and holiday deals:

Posted on November 24th, 2009 in Deals, Shopping | Comments Off on Black Friday & Christmas Shopping Tips

Written by Ben Edwards · Filed Under Deals, Shopping 

Cleaning Out the Garage

Our garage hasn’t been this clean and organized since we moved into our house! Since we’re debating selling our house my wife is on a de-cluttering mission so we spent the whole weekend cleaning out our garage.

Organization Saves Money

One thing I was reminded of as we worked is how you can save money by staying organized.  Over the years we’ve bought duplicates of the same item since we didn’t know that we already had one.  Of course, it can also save you time since you don’t have to waste effort searching through your garage for something you need.

Donation Records

I made several trips to the Salvation Army with car loads of items to donate. I kept a list of all the items that we donated, a description, the number of items, and their value.  I also got out my Flip video camera and filmed them to help me remember come tax time what we donated.

Buying What You Need

Getting rid of all those things was a good reminder to only buy what we need.  Why spend our hard earned money on something we might be getting rid of in a few years?  Cleaning out the garage and hauling away loads of stuff made me want to never buy anything again : )

Keeping What You Have

Of course one question that’s an ongoing struggle is how long do you keep things that you think you might need in the future. I’m in the “keep everything” and my wife is in the “get rid of everything” camp so we clashed all weekend about what to keep and what to get rid of.  What’s your take, how do you decide whether or how long to keep something that you “might” need at some point in the future?

Posted on November 23rd, 2009 in Home Owner | 6 Comments

Written by Ben Edwards · Filed Under Home Owner 

My Two Dollars

This week I recommend you check out My Two Dollars, written by David. Like many personal finance bloggers he doesn’t consider himself a financial expert, but rather blogs about his own experiences with money; such as being in-over-his head in debt, getting married and then changing career paths.

I’m actually a little jealous of David because he’s made the leap to working for himself, which I would like to do at some point. He offers some good tips about personal finances from the perspective of someone who is self-employed:

Another reason I like My Two Dollars is because the entire time David’s discussing ways to save money, reduce debt and manage your finances better – he’s also realistic about it. He warns against being overly cheap and frugal because if you never spend a dime to enjoy time with friends and family or buy something you really want to have for example – then you’re really not living are you? There are extremes to everything and David points out you can save money and reduce debt and responsibly manage your finances without going to the extremes of becoming a Scrooge.

About David

David is a mobile guy, he’s moved from Los Angeles to New Mexico to Colorado during the time he’s run his site.  I guess that’s one of the benefits of being self employed, you can move where ever you’d like.  You can tell he’s come a long way financially just from reading his early blog posts, so check out My Two Dollars and you can continue to learn about entreprenership and personal finance right along with him.

Recent Articles:

Here are a number of other posts from around the personal finance web:

Make More Money

Frugality

Investing

Real Estate

Holidays

Personal Finance

Posted on November 22nd, 2009 in Personal Finance | 2 Comments

Written by Ben Edwards · Filed Under Personal Finance 

Real Estate Short Sales Explained

Real estate short sales have become more common in the tough housing market of the last few years. A short sale is an attempt to sell a home instead of the bank taking it back by foreclosure. This sale can partially salvage the homeowner’s credit rating and lift the stress of large mortgage payments. If you’ve been house hunting over the last year, chances are you’ve run across at least one piece of real estate classified as a short sale.

The entire process of the short sale is based on the premise that the bank will take an immediate loss, approve the sale, and eliminate the high expenses of foreclosing, clearing, and reselling a home. This is a big chance that the prospective home buyers are taking. There are some things that they can do to in order to lessen the chance for disappointment of unapproved short sales:

The price is set by the agent & seller, not the bank:

The agent and seller often set a low asking price in order to attract buyers. The bank generally has no knowledge of the asking price. The bank has to approve what an acceptable offer would be. The lack of awareness in regards to price by the bank often leads to a longer process than anticipated. The bottom line is that the buyer needs to remain patient and understanding throughout the entire process.

One bank loan is better than two:

Having to deal with and get approval from two different banks is obviously a lot more difficult to get short sale clearance. Neither the agent nor the buyer can control this It simply depends on the bank or banks involved.

Make low ball offers at your own risk:

Remember the bank is typically unaware of the seller-set price during a short sale. When low ball offers arrive at the bank, they are often rejected, with little or no feedback for the prospective buyers. It may also take a considerably long time to hear back even on good offers due to the sheer volume of transactions lenders are overwhelmed with these days.

Knowledge of recent home sales:

The selling agent must be aware of recent home sales in the area to give prospective buyers a clearer picture of the properties that are selling. This will help the agent and seller when they seek approval of the asking price by the bank. Checking recent home sales will also give the buyer a better understanding of what the sales price of homes in the neighborhood are.

Don’t put your eggs in one basket:

In many cases, short sales are not “short.” It can be a very long process. A buyer must keep their options open and continue to actively look at other properties. Buyers must keep positive. The right property will come along. As long as the proper contingencies are in place, most areas allow an individual to have multiple offers out at any given time.

Sellers with multiple properties or healthy financials may not qualify:

If a seller owns more than a handful of properties or has a high net worth, they will most likely not be eligible for a short sale. In certain scenarios, the seller will be asked to pay the difference of the sale.

“Approved” prices are quickest:

An “approved short sale” has a price that has already been approved by the bank. Short sales are not always timely; however, making an offer on an “approved short sale” can be a much faster process. These types of short sales are some of the most highly desirable.

Each bank is different:

In short sales, the bank has all the power, and each one has a different idea of what the most appealing buyer is. One bank may prefer buyers with large down payments while another just wants the highest price. Most buyers want to know if the bank will give a lower price for an all cash offer. This is difficult to predict; they will not know until they make an offer.

Renovations are not happening , but credit is:

Any improvements that are necessary on a home, even if they are required for a loan, will most often not be done. Generally credit is issued and the buyer must take on the responsibility for any of the repairs.

The window is awfully small:

A short sale has little or no leniency in regards to the closing date compared to a traditional sale. Exceptions are rarely made and the buyer must close on time. It is imperative that all loan paperwork get completed immediately after opening escrow. If an issue is uncovered that could cause a delay, a request for an extension should be made immediately. If the request is made early enough, many banks will grant an extension. Don’t just assume it will happen.

Short sales can be a great opportunity to find your new home at a competitive price. They can also be a major headache that lasts for months. It is important to have a good understanding of the many factors that lead to a successful deal; or hire someone who does.

Posted on November 20th, 2009 in Real Estate | 6 Comments

Written by Victor · Filed Under Real Estate 

Five Tips on Buying Foreclosures

Buying a foreclosed home can be a great way to get a deal on real estate but it can be daunting if you’ve never done it before. Here are a few tips to consider when you’re thinking about buying a foreclosure.

Know Thy Neighbor – Remember, when you buy a home, it’s like getting married. You’re not just getting a spouse, you’re getting the in-laws and all of the crazy dysfunction that goes with them. Get to know your neighborhood a little. Drive through it at different times of the day. You’ll get a feel for traffic patterns that could disrupt your work day. You’ll also find out if the quiet neighborhood has any issues at night. Check out house sales online and peek at the sex offender registry to keep your children safe.

Due Diligence is Key – The longer a house has been vacant, the more issues there will be. If it was empty during the winter months, pipes may have cracked. That’s just one of many issues that could be present without you even being aware of it. It is imperative that EVERY buyer, regardless of the property, get a private home inspection. This type of pre-caution will keep you from buying the “Money Pit.”

Let the Games Begin – In many areas of this country, banks holding foreclosures on their books want to do one thing at all cost – get those properties off the books. Buyers in those places can get great deals with prices up to 20% off the already reduced prices. Imagine getting home for 65-70% of the market value”¦

These types of deals are not normal in all markets around the country. Banks that hold these properties in some markets act just like any other seller. They want market value, or as close to it as they can get for these properties. If you buy a house for close to market value and then find you need to put thousands of dollars into the home because of an issue that was uncovered, you may end up paying more than if you looked at other homes outside of foreclosure.

Ready, Set, Go!!! – Local banks are more inclined to work with buyers who already have pre-approved financing. While nothing is ever guaranteed, the chance of that financing falling through, compared to someone without pre-approval, is much lower.

Ready, Set”¦Wait??? – While the institutions want you to have all of your ducks in a row, their fowl won’t be so tidy. Buyers must be aware that they are dealing with a corporation with a chain of command, and not a single homeowner who can make quick decisions. Patience is key.

This is not an exhaustive list, but I hope these tips help you if you decide to look at a foreclosure for your next home purchase. There are gems out there in many neighborhoods. With the right financing and realtor, anything is possible.

Posted on November 18th, 2009 in Real Estate | 5 Comments

Written by Victor · Filed Under Real Estate 


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