Down Payment Question
I just read the "About Us section" and I'm inspired to save money. I cannot believe you were able to put a down payment on a house with an income of less than $35K.
In 1985 our income was about $22,000, and the amount we were borrowing was on $47,000 (the house was a 4 bedroom, repo, fixer-upper listed for $53,000). Plus we had no other debt. We put 15% down, and paid the mortgage off in 9 years. By that time our income increased and we were able to pay much more principal with each monthly payment. Funny thing about it was that we sold the house 9 years later for $79,000 – an amount that exceeded the purchase price of the house plus all of the interest we had paid. Not many people can say that!
The bottom line for us was that we hated owing money, so we managed our spending priorities using the budgeting system we described in America's Cheapest Family Gets You Right on the Money and in the downloadable audio seminar Managing Household Finances, so that we could live a comfortable lifestyle while decimating the debt.
The Household Budgeting System we have used for the since 1982 is now available on our website and is helping families around the world - you can get more info here.
If you want to learn even more, watch this 30 minute interview we did with Gary Foreman from The DollarStretcher.com about how we paid our home off in 9 years.
Can you please help me with this problem I have read your blog, Facebook page and books, and I am still having an issue with my teenaged son aged 16 nearly 17. He goes to school full-time, works part-time and receives $20 a week pocket money from us. He averages around $70 each week from his job.
Please help. I am at my wits end with his budgeting!
The first thing you should do is to stop giving your son $20 a week. He is earning his own money; you don’t need to pay for anything except room, board and medical expenses. After you close the spigot of money from Mom, just wait things out. Eventually he will want something and not have the money for it. Then you can lovingly say, "Sorry Dear, I can’t help you. You will have to earn it yourself." Our guess is that you may be providing too much for him so he is unmotivated to get it for himself.
You might also start creating a vision of what his future will be. Saying something like,
“Honey, you’re almost 18 years old and on the verge of becoming an adult. At 18, you’re going to have to make some adult decisions.
Will you buy a car, take the bus or ride a bike?
Will you go to go to college or work a full-time job?
If you go to college, we’ll help you with research, submitting applications and getting financial aid, but paying for it is your responsibility.
If you work a full-time job, you can choose to move into a place of your own, or pay rent to live here with us.
I love you and know that you’ll make smart choices and accomplish great things, and I certainly don’t want to steal any great financial accomplishments from you by paying for things that you are completely capable of handling for yourself.”
He may buck and complain as you cut off the financial support, but if you’re loving, and firm he’ll do well and gain a financial strength that is unstoppable!
If he does wake up and realize that he wants to accomplish more with what he earns, give him a copy of our book, “America’s Cheapest Family Gets You Right on the Money.” We describe a simple budgeting system to help him manage his money.
Hang in there Mom. Urging our children to “leave the nest,” is never easy. Let us know how things turn out!
Question: My mortgage payment keeps going up due to there not being enough in my escrow account. I have never missed a payment but other bills have suffered as a result of the increased monthly amount.
I have recently applied for a mortgage modification but right after that I received yet another letter letting me know about insufficient funds in my escrow and by the time alls said and done ill be paying what I was when I applied for the modification. I am a single mom and work a full time job and another job as needed and I still find it hard to make ends meet. I feel defeated.
Most mortgage companies include your property tax and homeowners insurance in your monthly payment. They hold the money in an impound account and make the payments to either your county assessor or insurance company when they are due.
If you have enough equity in your home, you can petition your mortgage company to allow you to form your own impound account—accumulating and paying your own property taxes and homeowner’s insurance. We did this because every few years, just before Christmas, we’d receive a friendly little notice that our impound account was deficient. We could either pay the deficit (usually $400 to $500) or allow our monthly payment to increase by $25 to $30. Our lender simply couldn’t get the knack of dividing our taxes and insurance payments by twelve! We grew tired of receiving their “You owe us $500” holiday greeting card. So we contacted the president of the company and insisted on doing our own impound. To our surprise, they agreed!
Just be aware that to do your own impound you must budget and save and protect that money so it’s there when you need it. This could be the very thing you need to manage your mortgage better!
Question: With grocery, utilities and public transportation prices climbing, our family is struggling to survive. We have a large family and do grow a small garden, but the bills keep piling up. We’re behind on our rent and income taxes. Our kids attend a charter school that requires uniforms which we can’t afford. We don’t have credit cards or a car and never take vacations. What can we do?
Answer: The economy is affecting everyone. We know that is no consolation to you when you’re struggling. We’ve got to remember that there are always solutions and options. First, find a way to spend less than you earn. Every month. Can your husband find a higher paying job? Do you need to look into cheaper housing in a different part of town? Could you be an apartment manager for a small apartment complex or be a caretaker of a larger property in exchange for free or reduced rent? Are any of your kids old enough to work part-time and contribute some of what they earn to the family? Does the school have a uniform exchange with reduced priced clothing? Is there a thrift store nearby where other families may have donated their used uniforms?
There are other things you can do right now do to improve your situation. They may hurt your pride a bit, but in the long run they will help you get back on your feet. These are:
1) Contact a food bank in your area and get some food for your family.
2) Call the Arizona Department of Economic Security and start the process to participate in the Supplemental Nutrition Assistance Program (formerly food stamps.) The number is 602-542-9935 in the Phoenix metro area; 800-352-8401 in the rest of the state. Other states have similar programs.
3) If you are part of a church or religious group, ask help from the leadership.
4) Contact your electric utility for low-income rate-payer assistance.
5) Contact the United Way and ask them to connect you to agencies that can help.
6) Contact the IRS now and start communicating with them about your back taxes.
7) Ask your school if they can scholarship uniform costs.
You may feel beaten down, but you don’t have to be a victim. Do one thing today, follow through and then do another thing in a couple of days. Little by little you'll climb this mountain. As long as your family is together, you’ve got each other and you’ve got hope. We’re cheering for you.
One of the biggest budget busters is overspending on recreation. We recently did "dinner and a movie" for a date night. If we hadn't had movie gift cards (from Christmas) and coupons from Sweet Tomatoes (one of our favs) we would have spent $45 for just the two of us. There has to be a better way to spend time without spending a fortune.
We love cocooning at home after a long day of work - we select a good movie, sit on the couch and share a fresh fruit smoothie or a bowl of popcorn. We still get movies from our public library - we love that we can reserve them online and then pick them up a few days later. But a couple years ago we purchased a BluRay player with WiFi access and have been enjoying watching movies online, on our TV for Free. Here's a list of websites that offer free movies.
Classic Cinema Online: Free online streaming service offering classic and vintage films, including silent films.
Crackle: Sony’s free streaming service that offers movies, series and original content. Supported devices include mobile devices, smart TVs, streaming media players and gaming consoles.