Friday, March 28, 2008

Rent our own house

Well, we had some good news earlier this week. On Monday, the buyer of our house asked if we were interested in renting it back from them for one year!

We answered yes and now we are in the process of negotiating our rental terms.

Hopefully by sometime next week we will have signed a lease agreement. But I have to wait until escrow closes before I pay them any money (1st and last or 1st plus security deposit). I wouldn't want to have paid out any money and then have the short sale not be approved by the banks and then have the sale fall through and lose my money.

As it is, the buyer has now communicated that their lock on a low interest rate will soon expire and that should that happen before the sale closes that they then might not be able to get another loan. I thought interest rates were dropping so we'll see what happens.

I'll keep you posted.

Sunday, March 23, 2008

Fix our Credit Scores

Our credit scores are in shambles. Now that the short sale of our house is progressing - already had termite inspection and a lady came over to take pictures for the bank holding our second mortgage - we can finally start to work on improving our credit scores.

I had two $300 limit credit cards that were maxed out that I paid $150 each. So that will make those cards show up as being used less than 50% which will improve our score. Those are the only two cards I have left that have open credit lines. I've closed all my other cards as part of my Balance Liquidation (repayment) Plan agreements with my creditors.

AND, I used $520 from my most recent paycheck to payoff my last PAYDAY loan I had outstanding!

My next paycheck will be the first paycheck in - I can't remember how long - that I will not have to pay any Payday loan fees, not have to payoff any Payday loans, not have to pay back people that I owe money, not have to payoff any cash advances from my bank via my checking account.

At one point in all this mess I was even taking cash advances from my corporate credit card. I had to borrow from family to pay that off - I had risked my job. How very stupid of me. I'll say it in black and white here that I have been a fool for a long, long time. Enough of this depressing talk.

I hope you had a great Easter Sunday. May God bless you and your loved ones.

Saturday, March 8, 2008

I fear being homeless

I've had a vision most of my life of ending my life as a homeless person.

I had a dream the other night that my wife and I lived in this cramped, dirty, broken windows and just plain old broken down trailer and that someone had broken in and that I was going to fight them.

I have dreams like that sometimes. I stay up late so that when I go to bed I am so tired that my mind doesn't have time to think about things. I just want to go to sleep as fast as I can. And go into a dead sleep. A sleep with dreams that you don't remember.

Friday, March 7, 2008

We found a buyer!

Wow! I'm VERY excited!

Our house went on the MLS last Thursday of the previous week and by Tuesday this week we had an OFFER!!!

My house is a short sale. The buyer offered $330,000 less than what we owe on our house. They offered about $50,000 less than what we listed our house for. We counter offerred $30,000 more than their first offer. They accepted. So our total loss will be $300,000.

Unbelievable! We are going to sell our house for the exact amount we paid for it five (5) years ago - so no total appreciation at all over five years! Of course the house appreciated up (inflated up) and then depreciated down - deflated down $300,000 over the last 18 months. Even if we had never refinanced our house nor taken out second mortgages or refinanced those first and second mortgages we still would not have gained anything.

You can argue that all the second mortgages we took out are gains in income. So I tried to account for the total $300,000 in losses (refi's) here:

- 45,000 - 3 refi's of fees to lenders, brokers, escrows, etc. expenses = $15,000 each time
- 56,000 - prepayment penalties multiplied 3 times
- 36,000 - negative amortization loss over 3 years starting in 2003
- 30,000 - About $30,000 of bad luck, bad decisions, broken down cars, medical bills, etc.
- 36,000 - 2005 through 2007 of wasted money in Payday loan fees = legal extortion
$ 97,000
- 97,000 - subsidized my income over four years = about $24,250 a year or $2,020/month to support a mortgage payment that has been $5500/month for almost two years and was about $3500/month four years ago.

And that's the best I can come up with looking back the last five years on what happened to $300,000 from refi loans because I sure don't have anything to show for it.

Reduce your interest rate to ZERO percent - 0%

A couple days ago I got one of my credit card companies to reduce their interest rate to 0.0 percent for ONE YEAR!

That will allow me to paydown my debt by almost $3600 over the next 12 months.

Here's what happened:

3/4/08 - (They called me.) I missed their call so I checked CallerID and then called them back. I explained that I could not make the monthly payment and I requested a Balance Liquidation Plan (BLP). The lady said that they cannot put me on a BLP because their policy is they need at least one year in between BLP's - I was on a BLP last year with them and recently came off it last January. She said that I owed about $800+ (just to bring my account current) and that my interest rate now was something like 12.5% and that if I missed that payment then my interest rate would go up to 30+%. She recommended credit counseling, I said I've already tried that and was denied. I said they recommended Chap 7 and she said that if that's what I have to do then that's too bad. She wanted me to make a payment but I told her I can't. I said that my mortgage payment is $5700 and that my take home was $6000. I said that we all lose and then I hung up.

3/4/08 - They called me back and gave me their Customer Assistance Center phone number. I called their Customer Assistance Center and then again explained my situation and then I was transferred to a Supervisor. She asked why I fell behind - I explained that my mortgage payments are $5700/mo and that I take home $6000/mo. They will put me on a One (1) Year Plan:- $285/month- at 0 percent- One Year- first payment due 3/26/08- manual payment plan- re-evaluate after one year (2/27/09).

The supervisor said that they would have to close my account and report to the credit score companies (Experian, TransUnion, etc) that I will be on a BLP with them. I said thanks. At this point I just want to get out of debt. My credit score is already so bad (poor status) that it doesn't really matter to me. I'm never going to have credit again anyway so a credit score is pointless from this point on until I die.

3/4/08 - It seems like if I use terms like "death" and "dying" in phrases like "...I'm financially dying" or "I'm financially already dead" or "I'm financially terminally ill." then that's when they immediately offer a payment plan.

3/4/08 - It took three (3) phone calls, but four (4) conversations, the same day - morning - to get a re-payment plan. The last conversation was with a Supervisor. And only after I told them I am "financially dead" did they seem to believe me.

I have a theory that if the credit card companies hear the pain and despair in your voice - in my case true - AND you use words/phrases like "financially dead" "I'm financially dying" etc then they will work with you. I think that "dead" "death" and "dying" are keywords for them.

Credit Card companies WANT YOU IN DEBT!

(This in response to someone who asked me about settling with the credit card companies.)


I know what that's like.

If you settle then yes it will affect your credit score in a negative way. If I were you I would call them up and ask them to settle for 60%. They will probably say no. They will tell you that you are current (if you are) and that they can't settle with you while you are current. That you have to be behind in your payments by 2-3 months before they can consider it - that has been my experience. The credit card companies WANT YOU IN DEBT!!! And they WANT you to be BEHIND and LATE in your payments so that they can raise their interest rate on upwards to 24% to 30%. CREDIT CARD companies WANT YOU in DEBT!

But what is your goal?

I would counsel you to set a goal to get out of debt and stay out of debt. Having debt makes you a slave to your creditors. Think about it. When you are in debt you are not free. They own you, they own your payback schedule, they own your interest rate, they own what interest rate you'll get when you buy a house and worse, THEY OWN YOUR TIME. THEY OWN A PORTION OF YOUR LIFE!

When you work and bring home a paycheck think of that as TIME. TIME spent for someone else's needs -the creditor's need, the creditor's benefit.

Set your goal to get out of debt and stay out of debt. You will never regret it.

Saturday, March 1, 2008

Short Sale our house

We finally decided to short sale our house. Last Sunday 2/24 I decided that I just can't continue to live the way we've been living - paycheck to paycheck.

We signed up with a realtor and he's going to list our house in the mid $400's. My mortgage totals $750,000. I 've been looking at comps and I think it'll probably get lowered down to about $400,000 - maybe even $375,000.

The market where I live is so bad. Sign everywhere about REO's, Bank Owned Property, Foreclosure Sale, etc.

I'll be lucky to get a short sale.

What happened is that January killed me. I had to take out $6000 in PayDay type loans and the fees for those are just insane - about 33% for a 2-4 week period. Then you have to renew just to stay a float. So all in all I paid about $4000 in fees alone for January and February. It just snowballs you into financial death.

So I've got to sell the house. I feel better about the decision. I can finally get out of this mess.

Smog check failed - cost is $1400

I've been delaying getting our car smog checked because I didn't have the money. I got it smog checked a couple weeks ago and we failed.

I took it to our dealer in town and they said I'd need about $1400 in repairs to get it to pass. They said I'd need: valve replacement kit and an Intake Manifold (IMRC) kit. I took it back and went to a smog check place. They did all the repairs for about $1000.

I had thought about just making greater than $450 in repairs and then taking the car to a Referee smog station to see if I could get the other $550 in repairs delayed for two years just to save some money. But my wife was tired of seeing the Check Engine light constantly on for the past two years. We finally had some money so I got that fixed.