Thinking of dipping into your home’s equity? There are a few things you should know.
There was a time, and not so long ago, that borrowing against a home’s equity was tough to do. Following the crash of 2008, it was generally considered a risk no prudent homeowner should consider.
Not anymore. According to the Federal Reserve, 2013 saw a big turnaround in home equity borrowing. Americans borrowed a record-breaking $701 billion in home equity loans, curiously referred to as HEL in the industry.
Lenders, in an amazing shift from what’s good for homeowners to what will boost their profits, love to advise homeowners to pay off their high-rate credit card debts with low-rate HELs. There are, however, a few things they don’t tell you.
1. Equity is a concept not a savings account. Equity, the difference between what you owe on your home and the amount you could sell it for now, is just a number. It is a theory, it is not cash in a savings account. The only way you can benefit from the equity and still live in it is to pledge the equity as collateral for a new loan. You are promising to give the cash to a lender if and when you sell. In the meantime you agree to make mostly-interest payments. And that plunges you into debt.
2. You’ll have a false sense of well-being. Transferring debt to a HEL can bring a kind of false sense of relief. Writing out big checks to credit0card companies from the loan proceeds feels righteous, like you are repaying debt—that you have achieved $0 balances on your unsecured debt. But that’s not exactly true. You are only moving your debt around. You can breathe again. And the old feelings of entitlement surface. You begin using the credit cards again. Before you know it the cards are maxed out again. But now you have the HEL, too.
Topping the financial resolutions for 2015, according to a recent Fidelity survey: saving more (55 percent), paying off debt (20 percent) and spending less (17 percent). Is there anything in that list that you’ve been thinking about for yourself in the coming New Year? Great, I have a formula you can start following right away—like today!
RECORD YOUR SPENDING. Sounds like a silly instruction, especially if you feel overwhelmed and under deposited. Nonetheless, if you will begin keeping a written record of every expenditure I can promise you a couple of things: 1. You’ll hesitate before making silly, impulsive purchases. 2. You’ll start taking back control once you see where all of your money goes.
GIVE BACK. I know. You’re broke. You have mountains of debt and some idiot is suggesting you give money away. That’s right and you can call me an idiot.
Giving is a mysterious, miraculous activity that when practiced will transform your life. I can’t explain it. I just know that with an attitude of thankfulness for what you do have. if you will give away a portion of your income, you will invite God’s supernatural involvement in your finances. Giving is the antidote for that wretched trend toward excess and self-indulgence.
Famed chef Julia Child preferred to call them the “remains of the day.” To the rest of us, they’re just leftovers. It’s a term that can mean anything from half a pan of lasagna to a dab of mashed potatoes that sit in the fridge until they turn green, at which time we feel a lot better about throwing them away. These days, that’s like throwing cash in the garbage.
The secret to stretching the food dollars is to find a delicious use for every last bit of what you buy. You need to see all leftovers as ingredients for new dishes, not just multiple go-rounds of the same thing in an effort to get rid of it. Here are some ideas that have helped me to see leftovers in a new way:
Coffee. Freeze leftover coffee in cubes to cool off hot coffee. Add black coffee to pot roast to create rich, brown gravy.
Halloween, Christmas or Easter candy. Take all the chocolate candy and break it up into little pieces. Place the pieces into a zip-type bag. Many recipes call for a cup to a cup and a half of chocolate morsels. Use these to replace the morsels. Freeze until ready to use.
Cooked Ham. Brown the last bits of cooked ham in a small amount of butter or margarine in a skillet. Beat a few eggs with water or milk and grated cheese, if desired. Pour scrambled egg mixture into skillet with ham. Cook, as usual, over low heat.
“Light of the world, you stepped down into darkness. Opened my eyes, let me see.” ~Tim Hughes
I hope that this beautiful day finds you happy and healthy, filled with hope and surrounded by whatever it is that brings you the most joy!
You may recall that this past year has been one of transition for my husband Harold and me. We
Dear Mary: Last summer, I refinanced my home and paid off my car so that I could begin a new career in insurance sales. I’ve been at my straight-commission job for just over six months now and although I am doing well by company standards, I’m making less than half of what I used to earn.
Business is slow for me right now and my debt is starting to creep up again. I’m good in sales but getting started in this market is tough. I know you started with nothing in the real estate business and did well. Insurance and real estate are similar in that they are heavy referral industries.
Do I bail and find another job to protect my family’s finances or do I give it my all to make this career a success? Where’s the line? I know you can’t make my decision for me but your thoughts would be greatly appreciated. Dinah
Dear Dinah: When I went into real estate sales and property management back in the 1980s, I was on salary plus commission, so we had something to count on. Three years later, my husband and I started our own real estate company, which then became commission only.
I had three years to establish a clientele and we’d also accumulated enough money to live on as we got established in our own business. I landed my first big commission as a commissioned salesperson in the business that I also was co-owner, within weeks of opening our business—only because I’d built a strong customer base of users and repeat buyers (investors) who trusted me. We had a lot of strength going in.
The U.S. Bureau of Labor Statistics says the price of a pound of ground beef climbed to another record high in November—a whopping $4.20 per pound. And that’s for mid-grade, not the leanest and highest quality.
If you and your family are not ready to turn vegetarian, nor are you prepared to pay that much for a pound for mediocre ground beef, you do have another option: Get creative. Okay, maybe a little bit sneaky, too.
But first, let’s talk turkey. I mean, ground beef. The really lean option of ground beef, 90/10, is not easy to prepare well. That’s because there’s not enough fat in it to turn out juicy, delicious fare. Lean ground beef requires seasoning as well as careful cooking.
Let’s say that you, like I, prefer organic, lean ground beef. Yesterday I paid $4.92 per pound for the best quality at Costco. Yikes! But I don’t really pay that. My effective cost is more like $3.24 per pound. How? Please don’t tell a soul … I stretch it. I take the best quality ground beef and then “extend” it by at least one-third. So whatever the price in the store, I mentally reduce it by 33 percent to get my effective cost.
STRETCHING. Sounds horrible, I know. But it’s not. By mixing something in with the ground beef to make it go farther, I get results that are so much better than the beef alone. I’m always doctoring, seasoning, adding this or that depending on what I’m making.
Need a list-minute gift for an office party, birthday your trusty mail carrier, a beloved teacher, co-worker or anyone else on your Christmas gift list? Here are six great ideas that won’t take much time, and certainly won’t break the bank.
Photo explosion box. Imagine a small photo album “box,” made from scrapbooking card stock, which folds out to reveal special photos when the lid is removed. What a perfect gift for parents, grandparents, children—anyone who loves photos. You can make this in just a few hours. In fact, while you’re at it make several. Find a complete tutorial HERE.
10-Minute homemade candy. Even if you are not a cook, if you have 10 minutes you can make Oreo Truffles. Put three sleeves of regular Oreo cookies in the food processor. Add 8 ounces of cream cheese at room temperature. Process until incorporated. Form small balls with a 2-teaspoon scoop or roll in your clean hands. Place on sheet pan and chill. Dip in melted dark chocolate and drizzle with white chocolate.
Give a treasure. Consider passing on an heirloom or family treasure to the next generation as a Christmas gift. Write a paragraph or two explaining the history or significance of the heirloom to go along with the gift. You will be preserving family history but not spending a dime. But here is the tricky part: Unless a person has expressed a particular love or desire for said heirloom and special treasure, do not assume your gesture will be appreciated.
This is a Guest Post by Nick Bautista, licensed insurance professional, soccer player and former member of the DPL Staff. Nick, his wife Lauren and Siberian Husky “Zeke” live in Virginia where Nick also brews his own beer and blogs at BareFinance.com
I hate paying for health insurance and I’m sure I’m not the only one who feels that way. Recently, I have been on a search for cheaper coverage.
Being that I’m young, healthy and I have my own individual health plan because my employer doesn’t offer any coverage, I was a bit optimistic about the Obamacare Healthcare Law that was going into effect in January of 2014. Although I liked the idea of helping those in need of insurance being able to get coverage I was worried about the change in insurance landscape.
My worries came to fruition once I saw the premiums and coverage my new plan would be offering. Besides the 50 percent increase in premiums, my deductible increased 40 percent, leaving me with worse coverage for more cost!
So I thought, what about the subsidy? The assistance is for those who earn 400 percent below the poverty level depending on household size. It just so happens that I make too much to qualify for a subsidy Off course, right? (Check if you qualify here)
It’s safe to say I am over this Obamacare, not that I was a fan to begin with.