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• Down payment and closing cost assistance
• 100% financing
• No minimum credit score required
• Flexible qualifying guidelines
• 30, 35 and 40-year loan terms available
• Fixed rate and fixed period Adjustable Rate Mortgages (ARM) options

During the housing boom, many of these loan agencies advertised to potential home owners, telling them to buy homes. Convincing statements like “Why rent when you can own” were resonating throughout all of America.

In fact, my wife and I almost took the plunge in March of 2007. We were looking at a property in a newly developed community and even went to their phase release. I remember waking up at 3:00am, driving to the house and dreaming about what we can do to the front / backyards. Luckily, the enthusiasm of buying our first home didn’t cloud our judgment in the end. I really need to thank the Irvine Housing Blog for giving me the necessary information to stay patient and wait. If it wasn’t for this blog, the home buying decision would have been a real net worth destroyer.

Getting a loan was never a problem a year ago, as companies like Countrywide gave everyone in the loan process huge incentives to approve loans. It didn’t matter if no one provided proof of income, nor did it matter that they were making $50,000 a year while buying a $500,000 house with no money down.

To make matters worst, the ARM loans were misused to the point that there are now millions of people facing foreclosure. We hear terms like sub-prime and HELOC abuse all the time but there are many mislead people in the average working class in serious trouble. These people are amongst us, they are our families and friends and not just people we hear about in the news. Being in California where home appreciation was one of the steepest in the country, I’ve seen my fair share of unhappy housing stories. I have two friends who are facing foreclosure and I can tell you that the foreclosure process is not something you want to go through. I totally overreacted when I wrote the post about ING’s disturbing ad (readers actually corrected me in that ING is actually a responsible lender and company) but if you see people you know suffer, you might do the same when ads like those come in your mailbox.

With so many people in such pain and the worst yet to come, Countrywide is still trying to advertise 100% financing. We can argue all day that it is really the people who brought their fate upon themselves but does Countrywide really have to help push them off the cliff?

I have $100,000 saved up in bank accounts by following good frugal practices that you and others outline. I however don’t budget and never keep track of my expenses. I know I’m saving money because my account grows every month. Why should I budget …

There are many reasons to making a budget and keeping track of all expenses apart from growing a surplus. I admit that it is actually very difficult to keep an expense tracking system up-to-date because not bothering to update it doesn’t have an immediate effect on us. However, maintaining a budget is like maintaining a bridge. There may not be problems even if you stop maintaining for a long time, but consequences may be disastrous when it does. Below are some more reasons why you want to maintain the bridge:

Builds Discipline and Organization
Having a budget really builds your discipline and organizes your finances, which is the first step of knowing your overall financial health. Without easy to read data, there is no way of knowing what is going on!

Forces You to Think About Money
This is a side benefit of having a budget but an important one. The more time you spend thinking about your money, the more focus you are in building your wealth. Once you start thinking about money often, you will find that you are able to find more ways to save and more ways to generate income!

Crisis Prevention
Looking at your finances in regular intervals will allow you to spot trends and see areas that can be improved way before it becomes a problem. By preventing crisis from starting, you are way ahead of everyone else who can only react!

Great Tool to Start Family Discussions
Money is always a hard subject to discuss. If the whole family is involved in budget making and expense tracking, it makes discussions much easier. It is always a good idea to just lay out the facts when talking about money matters and the expense tracker is the perfect tool to do this!

Quantifiable Way of Measuring Progress
In theory, we all want to reduce our spending and make more money but it is impossible to know how we are doing without actually keeping track of it. Budget tracking to measure progress is not just a benefit but a requirement!

Without a budget, how do we know that we are meeting our goals?

Knowledge is Power
By keeping track of your budgets, you will know exactly how much money you actually need on a monthly basis. Equipped with this knowledge, you are able to plan and allocate the required emergency funds, immediately know how unexpected issues like losing a job or having a child will do to your financial health.

Stress Reliever
Knowing your exact financial situation is such a stress reliever because you don’t have to worry about the unknown. Even if your financial situation is shaky, you will be spending time fixing the problem and not trying to find out what the issue is!

Let’s get back to thinking of the bridge. Keep maintaining it and you won’t be sorry. Become lazy and be ready to suffer the consequences.

Larry King Live on CNN interviewed two families in trouble because of the recent housing crisis last night.  The first family was starting to get behind on their payment, while the other already lost her home and is now living in her car!

Overview of the Two Situations
Family Hope
The first family (which we will referred to as Family Hope) lived in what they believed a $300,000 house.  They are starting to get behind in payments but they haven’t received their default notice yet.  They want to save their house but here are a few signs of why I think they haven’t really been doing something about it.

• Larry asked them how many months they are behind and they did not really know.
• When asked what their monthly mortgage is, they “think” it is around $2,100 - $2,200 instead of knowing
• They seem to have 2 jobs, but they believe it is impossible to come up with $2,200 to pay the mortgage.
• They are hoping that they won’t lose their house, but they aren’t making any effort to pay the mortgage payments and they’re not trying anything else to solve their situation.

Family Optimistic
The second family (referred to as Family Optimistic) is actually a female living with 2 dogs.  She is a notary who was helping mortgage companies approve loan documents.  Once the credit market and housing crisis started, no one could get loans and she was out of a job.  She knew she was getting into trouble at the beginning of the year and now she’s lost her 2-bedroom condo and just living in her car.  Even though her circumstances seem much worst, here’s what I observed.

• She didn’t try to delay the inevitable of losing her home.  Once she knew she was in trouble, she got rid of the house.
• She is out of a job and living in her car, but she found a part time job which gets her $500 a month.
• She is extremely optimistic, and truly believe that she will live through this crisis and find a job and get her house back.
• She is still genuinely thankful for everyone who donated money to her.

Thoughts on the Two Situations
Family Hope
It’s very difficult to understand why this family would think they could save their home when they aren’t even making payments.  To make it worst, they don’t really seem to know how many months they are behind on payments and what exactly the monthly mortgage payment is!

Larry asked them about the payment and after some mumbling (and probably guessing), they came up with a figure of $2,200. If that was true, why do they not think it was possible to come up with the payment with two incomes?  This family doesn’t even seem to be trying!

Family Optimistic
This lady on the other hand sounds more likely to bounce back from losing her home. Despite the fact that she has to sleep in her car every night, she is still extremely strong and optimistic about finding a job and one day living in a house again. She doesn’t know how she will do all that yet but she believes she will, she truly believes. I’m sure she will find a way, because she will keep trying.

What Can We Learn From This?
There are many things we can do to avoid situations like these.

1. It is absolutely necessary to have an emergency fund. We should setup an expense every month and pay the emergency fund account where we put money in and never take money out. If it was never needed, it means you were one of the few fortunate ones. There are many articles talking about having an emergency fund of 3 months of expenses but I think 6 months of your previous salary is much safer. With this fund, it is much better to be safe than sorry later.  Having an emergency fund would’ve helped Family Optimistic while she was trying to look for another job.
2. When times are good, you don’t spend the money but instead save as much as you can!  During times when money seems easy to come by, it is the best time to save.  I know first hand that it is very easy to spend more when large amounts of money are flowing our way, but life has its ups and downs and being prepared for the unexpected is always good.  If we don’t save when times are good, we may not have a chance when the tide shifts.
3. We need to be sensitive to our own financial situations.  Family Optimistic knew she was in trouble and moved on from her mistakes in a timely manner even though it meant her sleeping in a car.  In Family Hope’s situation, they still have a $300,000 house that they could sell and start over. This way, they can start saving up immediately for the down payment to another house in the future.  As it stands now, they are just furthering themselves into debt and delaying (or even eliminating) their chances to ever get a new house.
4. We absolutely need to cut our spending.  Family Optimistic is living off $500 a month while Family Hope cannot come up with $2,200 per month on two income.  As I mentioned yesterday, there are always ways to save more money!  Live frugally and be happy.
5. We need to act promptly with a sense of urgency!  Both of these families don’t seem to have the “I got to fix it now” attitude.  Family Hope should be cutting back on everything they are spending immediately and Family Optimistic should be out looking for another job instead of doing an interview with CNN!  The most responsible and sensitive person to our needs is ourselves.  Act immediately!
6. Believe that there is a solution!  Although Family Optimistic is in a much worst situation than Family Hope, she brings a feeling of optimism into her attitude which will propel her to find a solution to her problem.  I wouldn’t be surprised if she is back on her feet and sleeping on a comfortable bed in 6 months while Family Hope is sleeping in their cars by year end!

Final Words
Many situations can be avoided if we do some preventive actions.  In order to be trouble free, we need to be proactive instead of reactive.  If you don’t have one yet, setting up a family emergency fund for example would be a great first step.

Believing that a solution is achievable in any situation is also very important.  Never give up on yourself, even in a foreclosure situation.  It’s not the end of the world if you lose your home.  It just means you can start working towards your dream home again.

My parents taught me so much of what I know today.  The importance of living below our means, the understanding of money matters and the appreciation of compound interest are all values that were ingrained into me at a very young age.  I remember my mom used to tell me “there are always ways to save more money so keep looking”.

So mom, I am practicing this today.  I will keep looking for ways to cut my spending.  To help me do this, I listed out my average expenses for the last 3 months.

Expenses for the Past 3 Months (April to June 2008):

There seems to be major differences with just 3 months alone! The total for “low” represents me being ultra frugal while the total for “high” represents me as a major spender. Just this quick look has already established a dream goal of just spending $1417.14 per month. Now let’s break down the spending in each category to see whether this goal is achievable.

Food

This one is easy to cut back. All I need to do is eat out less and order less expensive food when I go out! Out of the $223.21 monthly high, 4 meals make up $180 of it so my goal here is to shoot for the low, $66.02.

Gas

Spending less money on gas is harder than cutting back on food but some ways include:

• Drive less by grouping trips with similar purposes
• Be more patient on the road and drive with less emphasis on strong acceleration and hard braking
• Think about the route that I will take before getting on the road to avoid driving unnecessarily

With these tips, I’m aiming for the average, $135.37 a month.

Goods

This is one where cutting is easier said than done. It’s very easy for me to just say that I will not buy anything each month, but it is very difficult to accomplish. Therefore, I’m going to try not buying anything in the next 3 months instead of saying I will never buy anything ever again.

Entertainment

I know doing this wouldn’t make it the ultimate guide to cutting my budget but I’m going to keep the entertainment expense at $150. As you can see, I can be totally frugal and just keep the entertainment expense to only $19.24 but I need to be sensible and make this goal practical and achievable. Therefore, I’m keeping some “fun” money in my new budget, making it $150 a month.

Misc

This one is easier than it seems. The $347.85 is actually a car maintenance expense last month. Since I don’t foresee anymore unexpected expenses, my goal is $20 a month for miscellaneous expenses.

Average Spending of the Last 3 Months: $1875.18
New Budget Goal: $1601.39
Savings: $273.79

I feel good already knowing there are more ways to save! Follow me and do the same analysis with your budget today! Then come back and tell us how much you will be saving!

One great way to do this is just discuss the problem with encouraging people. These people are easy to spot because they are happy most of the time and often have more friends than everyone else. People naturally hang around them because they offer advice and talk about solutions rather than tell you why your situation can’t work.

Talking with them about your problem is great because they make you feel better that your solution will work. In addition, they will probably offer a few suggestions of their own to help. For example, I felt bad last night because my job and blogs were all becoming a little overwhelming. What ended up happening was that my wife took me out on a nice walk where we talked about things and I felt much better afterwards, and even wrote a post about it.

Of course, encouraging people will never be able to solve your problems completely. They can only offer advices and allow their optimism to “rub off” on you. It’s still up to you to approach them, present your problem and ultimately solve them yourself. If you talk things through with encouraging people though, you will be off to a great start in solving your issues and staying motivated!

This week, I participated in many more carnivals than in recent past.  The result is that my traffic has increased as my site is seen in many more places!  My suggestion to use Google Alert for coupon watching was also picked by Squawkfox as the editor’s choice for the festival of frugality!

On the PFN front, we also wrote our first group project on Summer Fun!  I hope that you liked our guide and expect more from our group of fantastic personal finance bloggers in the future (excuse my shameless plug)!

Great Articles Around the Web

• Unlike Bill Gates, David@My Two Dollars carries a wallet and he’s telling us what’s inside!
• Paid Twice shares his biggest Financial Vice!  For the original, check out Five Cent Nickel’s.
• Would towing with a small car be a better choice?  Read Clever Dude’s take.
• Four Pillars explains to us why he won’t invest in peer to peer lending.
• Blunt Money is quite happy to find another quarter in the vending machine.  I remember I was excited when it happened to me too!!
• If you are a Canadian resident, Canadian Capitalist is giving away a free personal finance book so go check the post out!

Carnivals

• Carnival of Financial Planning
• Carnival of Money Stories
• Carnival of Debt Reduction
• Carnival of Observations of Life
• Festival of Frugality - Picked as Editors Choice!
• Carnival of Personal Finance

With the release of the 3G iPhone and iPhone 2.0 software, Apple has allowed 3rd party developers to write applications that work with the iPhone and iPod Touch and opened the app store to the public! With the world’s imagination at work, I’m sure there will be a ton of clever applications written for the personal finance world.

Since the app store opened for two days already, let’s take a look at all the personal finance applications available currently.

ACTCurrency - $0.99
Overview: A simple currency converter that becomes extremely useful when you are out of the country.
Pro: Uses are obvious.  It makes you wonder why I didn’t think of it.
Con: Why doesn’t this grab the most up-to-date currency from the web is anyone’s guess.

ACTGratuity - $0.99
Overview: Great little utility that automatically adds tip to a subtotal and splits the bill for you, letting you know how much each person should pay.
Pro: Easy and fast to use for people who go dutch often.
Con: Don’t let anyone know that you paid for this software because you can easily do the same thing on a calculator.

BigTipper - $1.99
Overview: Exactly the same thing as ACTGratuity. I guess great minds think alike!
Pro: Slightly more stylish than its competitor and multiple language support! It also offers the round function for those that care about the cents!
Con: Not only will you be talked about by people who didn’t buy any of these type of apps, ACTGratuity users will send you unpleasant comments too because it’s $1 more!

Bloomberg - Free * MoneyNing recommended *
Overview: App that offers stock quotes, charts, analysis and latest news from companies around the world.
Pro: Free! This gives E*Trade’s Mobile Pro a run for its money.
Con: Only if you work for CNBC.

Budget - $4.99 * MoneyNing recommended *
Overview: Easily track your budget. Perfect for something like the iPhone because you won’t forget to input your expenses!
Pro: Easy input, nice interface and offers graphs too!
Con: A little expensive when compared to other iPhone Apps.

Calculators - $0.99
Overview: A car and mortgage payment calculator which lets you tests out different scenarios
Pro: Finally there’s a way calculate quickly whether the car salesman is lying or not!
Con: When the typing pad shows up, half the fields are blocked from input!!

CheckPlease
Overview: This is a ultra simple calculator for people to calculate tips, taxes and splitting of bills.
Pro: Finally someone with some sense to offer this for free!
Con: It doesn’t look as good as the paid versions but it does the job! It’s free so stop whining.

DutchTab - $2.99
Overview: Just like the others but adds a few other features like storing who paid what and who still needs to pay!
Pro: Simple interface, and great if you have friends that always say they paid last time!
Con: Not needed if you use the calculator and have decent friends!

Expense2GO - Free * MoneyNing recommended *
Overview: Create expense report and optionally sync with Salesforce CRM
Pro: Good use of the camera, capture expenses as you incur them and more!
Con: Why didn’t they come up with this before?

GarageBuy - Free
Overview: The iPhone version of GarageBuy for the mac.
Pro: Great to keep track of multiple ebay bids while on the road.
Con: There better not be affiliate links because ebay has its own app for the iPhone.

Gratuity - $0.99
Overview: Just another gratuity calculator
Pro: Another choice for us consumers
Con: Get in line! At least ACTGratuity knows he will be on top if they are sorted alphabetically!

iGold - $9.99
Overview: Displays gold, silver, and platinum prices!
Pro: Top honors for the one of the most expensive but useless iPhone App!
Con: Yahoo Finance?

iSoroban - $1.99
Overview: iPhone version of Soroban - a japanese calculator used way before the calculator was invented. This is more a game than a real useful tool.
Pro: If you are a die hard Soroban fan, then this is for you.
Con: The main benefit of Soroban is the speed of calculation and you cannot get this with the iPhone touchscreen.

iSpend - $15.99
Overview: Another expense tracker
Pro: Organized interface, easy to use.
Con: Winner of the most expensive personal finance app award.

iTip - $0.99
Overview: Yawn…
Pro: People searching tip might get this one first! It’s all in the name!
Con: I love the originality of adding the “i” in front. Here’s one. iwillnotbuythis

iXpenseIt - $4.99
Overview: Another expense tracking software.
Pro: This one offers a picture taking feature so you can take a pic of the actual receipt!
Con: Categories are too general and not easily customizable.

Loan Calc - $0.99
Overview: Simple loan calculator.
Pro: Simple and easy to use
Con: Over simplified. Looks like a way to make money off people more than a useful app.

Loan Sim - $0.99
Overview: Nice graphical loan calculator that’s very similar to Loan Calc
Pro: If $0.99 is going to save yourself from foreclosure, go for this graphical calculator!
Con: Do I really need this on an iPhone?

Mini Mortgage Manager - $1.99
Overview: Another way of saying “loan calculator”.
Pro: The graphics are nicer than others.
Con: It’s the same thing for more money!!!

Mobile Banking - Free * MoneyNing recommended *
Overview: A nice little app for Bank of America customers!
Pro: Quick way to find the closest ATM machine!
Con: No one knows where this is as secure as going through the online website.  Too bad this only works for Bank of America customers!

Nexonia Expenses - Free
Overview: Expense Tracker. Yes another one.
Pro: Free for users of Nexonia.com, email PDFs to yourself.
Con: Can’t be used for people who don’t use Nexonia.com.

PayPal - Free
Overview: Allows you to use PayPal with this app to check your balance or pay someone quickly.
Pro: Easy and quick.
Con: When was the last time you used PayPal outside of your house?

PocketMoney - $9.99 * MoneyNing recommended *
Overview: A port from Palm, this is yet another expense tracker for the iPhone
Pro: Years of experience working on the Palm version, this is the most feature-rich expense tracker available on the iPhone so far
Con: Much more expensive than other solutions and no free trial!

Puluwai Real Estate Search
Overview: Now you can quickly search for houses for sale in your area.
Pro: Perfect for the realtor!
Con: Good luck with this app in the current market. The reason why you didn’t sell those houses aren’t because of the lack of this app.

Save Benjis - Free * MoneyNing recommended *
Overview: Quickly search online for the latest low prices for anything in the market!
Pro: Amazingly simple app. Just what everyone’s been waiting for, not to mention it’s free.
Con: Input your keywords carefully or else you will get information overload!  I’m surprised that not many people have thought of this app yet so this is the only choice (even though it’s a good one).

ShoppingList - Free
Overview: Keep track of your shopping list conveniently on the iPhone
Pro: Easy to use, easily keep track of what you already bought and haven’t
Con: You can do all this for free with notes but it’s only $0.99 so it might be worth the price. Inputting everything you need before you leave the house might be a pain though.

Spend - $1.99
Overview: Budget tracker
Pro: Cheap
Con: Better solutions out there. For such an important app, paying more for the best might be worth it.

SplashMoney - $9.99
Overview: Budget……tracker……
Pro: Password protection, wirelessly connect to online banks, quick shortcut.
Con: There are so many of these it’s hard to choose one!

TapExpense - $4.99
Overview: Another one!!!
Pro: Doesn’t need the input keyboard
Con: There are better ones out there.

Tip Calc - $0.99
Overview: Tip Calculator #83
Pro: Simple, small form footprint
Con: Maybe too simple to warrant paying for it

TipCalc - $0.99
Overview: Tip Calculator #83 (this isn’t a typo)
Pro: See above
Con: See above

Tipper - $1.99
Overview: Was there a group competition to write the tip software?
Pro: The author is welcome to contact me to change this section because I don’t know what to write
Con: More expensive and the name should be changed to tip calculator #83

Tips - $1.99
Overview: He must be the first person to come up with this or something because he got the name!
Pro: The interface is simple and it looks pretty good.
Con: More money for the same thing!

Tipulator - $0.99
Overview: Tip calculator #83
Pro: Optional tip rounding to the nearest dollar! Wow!
Con: Split checks among several people! Oh is this the section for disadvantages?

TripLog/1040 - $12.99
Overview: A way to keep track of your business expenses
Pro: Perfect for salespeople. Allows you to email yourself a log so data can be transferred to the computer unlike most other apps currently.
Con: No one knows all the features because no one can figure out the UI yet.

Currently, not many applications exists for the iPhone but as Apple’s 100M development fund is put into use, better and better applications will be written. I’m excited to see the potential of the app store and foresee more and more companies writing free extensions of their website to work with the iPhone to provide better, faster and more convenient services.

If you haven’t already, perhaps now is the time to line up to buy a new iPhone.

Photo Credit - Apple, Inc

Thanks to privacy laws, consumers like us have the rights to restrict companies from passing our personal and financial information with their affiliates and companies that they do business with.  Just the other day, HSBC sent me a letter asking me to respond by checking the check box besides the two following statements if I didn’t want junk mail originated from them.

1. NO, please do not share personal and financial information with your affiliated companies.
2. NO, please do not share personal and financial information with outside companies you contract with to provide financial products and services.

At the end of the letter, it even gives you three options to reply

1. Fill out, sign and send back this form to us using the envelope provided
2. Call this toll-free number: 1-877-394-HSBC (1-877-394-4722) and select option 2
3. Reply electronically by contacting us through the following Internet address: us.hsbc.com/californiaprivacy

It was great of them to provide the internet option because it was by far the easiest and fastest way to respond. If there are any complaints, it would be that a response is needed to decline sharing of our information. As it stands now, HSBC can freely our information to companies that want our business if we didn’t get the notice or didn’t bother to reply.

Speaking of junk mail, there are actually many companies that sell our information to different businesses. If you want to drastically reduce your junk mail, send each of the following companies a letter asking to be placed in their name removal file and off their telemarketing lists. The more information you can provide them about yourself, the more success you will have.

Advo Incorporated
Delivery Services
1001 W. Walnut Street
Compton, CA 90220-5191

Direct Marketing Association
Attn: Customer Service Opt Out
1120 Avenue of the Americas
New York, NY 10036-6700

Experian Consumer Sevices
List Maintenance
901 West Bond
Lincoln, NE 68521

infoUSA, Inc.
5711 S. 86th Circle
Omaha, NE 68127-0347

Acxiom Corporation
Opt-Outs
P.O. Box 2000
Conway, AR 72033-2000

Trans Union LLC
Name Removal Option
P.O. Box 97328
Jackson, MS 39288-7328

LEXIS-NEXIS
9393 Springboro Pike
P.O. Box 933
Dayton, OH 45401

National Demographics & Lifestyles
Customer Service Department
1621 18th Street, #300
Denver, CO 80202

Experian Consumer Services
List Maintenance
901 West Bond
Lincoln, NE 68521

The last company (Experian Consumer Services) is especially important because it will drastically cut down the number of credit card offers that you get through the mail!

I know it’s a tedious process to mail to so many companies but imagine the amount of time that you’ve spent cutting up and throwing out junk mail!