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The study had some interesting conclusions; to wit – There isn’t a correlation between the state’s cost of living and the level of debt carried by students when they graduate. In addition, North Dakota, a state with a fairly low cost of living was number 3 in the level of student debt. Iowa, another state with a low cost of living, ended up in the number 2 spot on the list of indebted students.

You’d think that going to a state school would be less expensive and help avoid graduating with a boat load of debt, but no, that’s not always how it works. In some states, North Dakota and Iowa among them, but also Kentucky, Delaware and Tennessee, you could easily end up with greater levels of debt than those who attended private schools, according to researchers.

There is also not a direct correlation between the cost of tuition at a college or university and the debt level of its graduates. Some schools with very high tuition had relatively low levels of debt among graduates. That could be because a large number of students attend the private schools on scholarships and thus pay no tuition, or because they come from relatively wealthy families that could afford to foot most or all of the bill for the student’s education out of their own pocket. In addition, some schools and states with high tuition costs have better financial aid programs to offset some or all of the student’s costs.

Student loan provider Nellie Mae reports that the average undergraduate debt upon graduation is now up to $27,600. If you’re one of these students with crushing student loan obligations what can you do? You can just gut it out and pay off your loans, or you can default and leave your lender hanging. Okay, so you’re probably trying to avoid the second choice in this scenario. The fact remains though, that high levels of student debt can set you back substantially when it comes to building a solid retirement account, buying a home or, ironically, setting up a college account for your own kids.

One way to reduce your loan payments is to consolidate your student loans. Much like any other loan consolidation program, a student loan consolidation program allows you to use a single, large loan to pay off many smaller loans, in theory at a lower interest rate. As with consolidation loans for other types of debt, such as credit cards, you’ll substantially reduce your monthly payment by doing so. You’ll also make your life more convenient by paying a single loan, instead of a myriad of smaller ones.

The major difference between consolidating a student loan and your credit card debt is that you won’t have to put your house on the line when you consolidate a student loan, as you would with credit card debt. This holds true for federally insured student loans, but typically is not the case if you got a personal loan to help pay for your education.
 

There are some huge benefits to student loan consolidation, such as dramatically reduced monthly payments, but it’s a little different than rolling your credit cards into a single loan. When consolidating student loans, you have a deadline for application each year. In the last few years there have been several changes by the U.S. Department of Education regarding how you proceed with consolidation.

Student loan interest rates are determined by the 91-day T-bill auction. To receive the current year’s rates, and this is important, your completed consolidation loan application must be received by the lender, and they have to confirm the loan before July 1^st. If the loan isn’t approved by July 1^st, you’ll pay the following year’s rates. In years gone by, there was a grace period that would allow people to skate in past the deadline as long as their complemented application was in the lender’s hands. Now they must have completely processed the loan request and approved the loan by the deadline. You can thank the 109^th Congress for that.

Unlike your credit cards, you should almost always consolidate your school loans, if they are federally insured and you can drop the aggregate interest rate. Another difference is that you won’t have to submit to much of the documentation required with other types of loans, such as credit checks or any other such nonsense. Your school's financial aid office can be a big help with your consolidation efforts. One last thing; verify if your lender will give you an interest rate reduction on your consolidation loan if you have your payment automatically withdrawn from your checking account.

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It brings up a great point, and a fantastic way you can save money on your cable bill, and more, when you are participating in the festival of consumerism that many of our holidays have degenerated into. Don’t get me wrong, I’m as acquisitive as the next person out there and love a good sale. I mean check out those Fry’s circulars in the back of the sports pages; a 4GB flash drive for $29.97! But I digress.

There is a tremendous way to keep more of your hard earned money in your wallet, bank account, IRA, 401(k), etc., when doing your holiday shopping. You need to shop early. I mean really early, as in about 364 days early. My wife is great about stocking up on Easter and Halloween candy on the day immediately following, often at discounts of up to 70%. Obviously much of that never makes it to the following year’s holiday, but she’s similarly skilled at ferreting out deals on the days after Christmas, Halloween and other days that celebrate something that most people have forgotten, except the vice presidents of marketing at the local retail chains.

You should never buy any type of holiday specific decoration, packaging, or gift in the days preceding the holiday in question. Only on those days immediately after the holiday has past should you indulge your consumerist tendencies. When it comes to spending less money, timing is everything. Some families even celebrate holidays a few days late in order to allow members maximize the power of their dollars. A bit extreme, perhaps? Maybe, but when it comes to saving money, it definitely pays to be creative.

One more thing regarding saving yourself some cash – you should ask your cable or satellite provider for a discount every year or so. For maximum effectiveness, make the discount request in person. A few weeks ago I actually went in to the local Comcast office, instead of simply mailing a check. A profitable visit it was, too. With one simple question the nice lady at the counter kept me from indulging myself with a new Verizon FIOS account by giving me a 50% discount on cable broadband Internet for the next 6 months! But wait! There’s more! I also got out of there with a free HDTV DVR and expanded service for the same 6 month period without spending any more on cable TV service. That was definitely worth the 4 block trip from my office to Comcast, I’d say.

If you haven’t paid your local provider a personal visit, make the trip. It could not only save you some real money on your cable bill, but give you expanded HDTV service with a DVR (just in time for football season). A note on picture quality from your comcast-supplied motorola cable boxes: The picture quality can be pretty dramatically improved, for both HDTV and SD channels by using a TiVO (it must be a series 3, or TiVO HD) for your tuner and DVR instead of the Comcast cable box. It won't work for you if you use the video on demand features, but if you don't, you're in for a treat. This is especially true for those of you with 40" and larger screens, WOW!

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Here's what an investment bankers does; they're a finance mucky-muck. They are financial advisers at the highest level. Investment bankers are retained by firms and high powered individuals to analyze and put together big business deals; the biggest actually. Company mergers, IPOs, privatizations, and even planning the future business strategy of a company can all be handled by an investment banking firm. When a big deal such as this is made the investment bankers must structure, present, and help finalize them. If you're allergic to hard work and extremely long hours, you should shy away from a career in this field. However if you love business, are unafraid of deals that can stretch on for weeks, are extremely detail oriented, and have a talent for communication, investment banking could be just the career you're looking for.

Can you be well rewarded for your 60 – 80 hour weeks? Hell yes, you can be well rewarded. You can not only get handsome monetary compensation, but some great perks as well. Junior associates typically start in the $70K - $90K range right out of business school, and can make 5 times than with salary and bonuses as they rise through company ranks. Some make even more. Extras such as expense accounts, full insurance, health club memberships, country club memberships, company cars and use of the corporate retreat on weekends are typical for upper-level associates as well.

Unless you are a cut above, or have impeccable business school credentials however, you'll probably begin your investment banking career as an analyst. As the name implies, an analyst spends much of their time doing research, number crunching, and bean counting. The goal of an investment bank is to create a winning deal and a presentation to ensure they land it. To make sure they can pull this off, investment banking firms often require teams of analysts to delve into every angle of the businesses, industries and economies that affect the impending deal.

If you're hired as a junior associate you'll spend most of your time either supervising analysts or working with associates preparing presentations. As investment bankers rise from junior to senior status, they begin to work on more meaty parts of the deals, planning their client's corporate financial strategy, and prospecting for new clients. Now is when they can really make tremendous amounts of money.

Goldman Sachs, historically the benchmark for investment banker compensation, has actually slowed in it's compensation of employees. GS's 2007, Q2 results indicate the firm paid out a still impressive $4.89B in compensation and benefits! In 2006 they were listed as having 22,425 employees worldwide. That averages out to just over $218,000 in quarterly compensation for every employee. Subtracting ¼ of CEO Lloyd C. Blankfein's $43.8 million annual compensation (according to Forbes, and not including stock options), still leaves the average employee with a very nice $217,571 each. Remember, this is quarterly compensation.

You may not be able to begin your career at one of the most prestigious firms such as Goldman Sachs, Blackstone, Morgan Stanley, Lazard, or Credit Suisse, but thankfully there are hundreds of firms from which to choose in order to get your foot in the industry. You should, however, be prepared to relocate to New York. Most of the investment banking activity and firms are located there. Other opportunities exist in Charlotte NC, Minneapolis MN, London England, and San Francisco if you just can't make yourself move to New York.

If you like intellectually stimulating work, wouldn't live anywhere else but NYC, live and breathe business, want a healthy compensation package and aren't afraid to work grueling hours at a job you love in order to get it, investment banking is the career for you! Actually, if the preceding does describe you, a career in investment banking bears looking into, as future demand is predicted to be strong. Just look out for the scores of unemployed mortgage bankers and brokers you might have for competition.

For more information about how you can start a lucrative and rewarding career in the investment banking field, check out the Comprehensive Guide to Investment Banking by K.Thomas Liaw, over at Amazon. If you decide you have to have a copy, I'll get a few pennies from Amazon, which will help keep the ole' blog a runnin'.

If you're about to interview for a position in the investment banking field, take a look at these actual investment banking interview questions. It costs a little bit, but it's probably money well spent, especially if you contrast that with the cost of school and the compensation at stake. The interview will make or break you, and solid preparation is the key to aceing it and getting the job (or at least a second interview). You can buy their interview prep guide, but they also have some free information available for download that can help out in your employment quest.

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So, how the heck are you supposed to get to the point where you can drive around in your realtor's Lexus without wasting your time, theirs, or the sellers? Don't laugh, it happens. I have a friend who's selling their home and Realtors actually brought a few prospective buyers who were not pre-approved. Why? It's anyone's guess, but if you haven't reached that step in the process, your home may be out of reach. You won't really know (unless you can pay cash for the property or you're pretty damned confident in your financial wherewithal).

Step 1 in Getting a Home Loan -
Step 1 in getting a loan for your new home is to get all your financial information and supporting documentation in order. Key among this is a copy of your credit report, and documentation supporting your income. You need to do this well in advance of actually looking for your loan. Why?

Because, especially in the credit market in which we find ourselves, having a good credit score will enable you to get a favorable mortgage. The days of getting financed with a FICO score of 525, $25,000 in auto and credit card debt and a stated income of $40,000 are probably behind us for a while, as far as most lenders are concerned. You'll need to be able to actually verify your income by gathering 2 years worth of W-2's or tax returns, and proof of employment, such as recent paycheck stubs.

You should  get a copy of your credit report, not only to determine your credit rating, but to improve your score if at all possible. I've written several posts on the steps you can take to improve your credit score. Just increasing your score a few points could make the difference between getting a loan and sitting on the sidelines of home ownership. In addition, the better your credit score, the more favorable interest rate you'll be able to get, lowing you mortgage payment and saving you many thousands of dollars over the life of the loan.

Step 2 in Getting a Home Loan -
The second step in getting a home loan is to locate a lender. These days that may be a mite bit more difficult than it was only a few short months ago, but relax, there are still plenty of folks out there with money to lend. Your task is to find one. That's a process in itself. First, you should  call around to local mortgage companies and ask talk to them. Ask friends who they worked with when they bought their homes. A referral from a few satisfied friends, especially if they're financially savy, can be worth quite a bit here. Check your bank or credit union as well. If you've been a good, long term customer, you may do well, but don't just go to your bank and take whatever they give you (if they'll give you anything, the big banks are getting a bit gun shy lately).

Step 3 in Getting a Home Loan -
Your third step in obtaining a home loan is to evaluate the different lenders you met in step 2. Although requirements have been getting more stringent, many will still let your qualify for more house than your income can really support. In this situation you can end up being house poor. House poverty is a sad situation where too great of a percentage of your annual income goes into supporting your mortgage payments and home maintenance. Don't let it happen to you. Make a realistic budget to determine how much home you can afford, keeping in mind to have some income in reserve, and stick to it.

When evaluating loan offers, you'll want to consider the interest rate, fees, term of the loan, and how much total money you'll pay ever the life of the loan. Remember, you'll pay interest on all the fees and closing costs associated with the loan, so any costs outside the mortgage itself that gets rolled into your loan will cost far more than their initial dollar figure by the end of the loan. Look for the lowest total cost over the life of the loan. Total includes everything. The annual percentage rate (APR) stated in the good faith estimate you get from the lender will help here. Be advised however that APRs are kind of like a good guideline. There are no consistent standards that the APR value must stick to, so they may not be directly comparable between 2 different loans.

You want to then get pre-approved status from your lender of choice. Pre-approval should not be confused with pre-qualified, although it sometimes is. Pre-approval is a more thorough process and your credit will be checked so you’re ready for a real mortgage, hence the reason for step 1 above. Once you have your pre-approval, you can go find a Realtor. Good luck!

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First of all, check your mortgage documentation if you are unsure what type of mortgage you're committed to. Really, this is one piece of financial information you shouldn't be in the dark about. I'm not making this up about Americans not knowing. According to a survey (I've referenced it in previous posts) conducted by Gfk Roper, 34% of Americans actually don't have a clue about what type of mortgage they pay every month.

If you have an adjustable rate mortgage, there are some terms you should be familiar with. If you don't know what type of mortgage you have, you probably don't know what these mortgage terms mean, either, so read up.

Mortgage Term Definitions:

Index: By definition, ARMs adjust, You may not know how this all happens. There are various interest rates used in the financial community that are, for the most part, used by financial institutions for determining how much interest is charged for interbank lending. These are used as an index to base your ARM upon. As the index changes, so will the interest rate you pay for your mortgage. Every so often (exactly when is spelled out in the terms of your loan that you probably didn't read if you're unaware what type of mortgage you have) the appropriate index is used to calculate your mortgage interest rate. Some of the most popular indices are the 1 year treasury rate, COFI (Cost Of Funds Index), the LIBOR (London InterBank Offered Rate), and the MTA (Monthly Treasury Average).

Margin: This is a killer for ARMs. Margin is the number of percentage points the the lender adds to whatever index applies to your ARM when determining your interest rate. The total of the Index and the margin is the interest rate you'll be paying. The one thing not known by most consumers is what the margin their lender uses for this calculation. However, your lender is not required by law to disclose you ARM's margin in the loan disclosure documentation.

Cap: This is the maximum number of percentage points that your ARM can adjust. Even if the sum of the index and margin are greater than the cap, your mortgage can only adjust by number of percentage points allowed by the cap. There a various caps that will apply to your ARM. There is a periodic cap that determines how much your mortgage can adjust at each adjustment period. There is also a lifetime cap that states the maximum percentage your mortgage interest rate may be. Sadly for mortgage holders, the is also a floor cap that tells how much the lowest interest rate your lender will charge.

Teaser: Here's where so many mortgage holder's get into trouble. The teaser rate is an artificially low interest rate used in the initial period to keep the payment, well, artificially low. The thing is that too many mortgage holders rely on this dollar amount when determining how much home they can afford, only to find out they really can't afford their home after all. You usually aren't able to these artificially low payments for very long, only about a year in most cases, so your joy may be short lived.

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For most people, just buying into a few solid mutual funds, or getting whatever your 401(k) offers is probably the best strategy anyway. Picking stocks takes creativity, insight and most importantly, plenty of research. Most people simply aren’t able to do the copious research required to pick winning stocks. To retire well, you’ll need to choose investments that generate consistent returns, and even the pros who can do so are wrong on many occasions. The key is to be right more often than you’re wrong, and by a greater margin.

Here are 3 different purely financial analysis techniques you can use to look at potential investments. Some of these are better suited to one time capital investments than investments such as stocks, where the future is hard to predict. In addition, the quality of information you use to make the calculations will obviously impact the accuracy of your results. In a game that lives and dies by a few percentage points, it doesn’t take much of a swing either way to make or break your portfolio. The 3 analysis techniques are: Net Present Value, Payback Period and Average Rate of Return. Oh, you can also use the “Stick my wet finger in the breeze” technique, which has, in fact, been practiced by many successful investors, but more often than not leads to financial disaster.

Which you choose is determined by your individual requirements. The one common problem faced by all purely financial analysis techniques is that they ignore non-financial factors such as the quality of the management team and their past performance, future plans of the company, what a company’s competitors may be doing, regulatory issues, the legal environment, the general market situation the company faces, opportunity cost, and so on. For this reason, purely financial analysis should never be the sole criteria for evaluating an equity investment. These other factors may have as much or more of an impact on the investment’s future.

Investment Analysis Technique 1 – Net Present Value
If you took any finance classes in college, you probably remember this one. It uses the time value of money, and is in fact useful any time you have to determine the value of a series of payments over time, such as when calculating the true value of an annuity or the cost of a loan. Here’s the formula for it:

Got that?? Well, basically it states that the sum of a future payment or payment stream, with the appropriate discount rate applied, equals the sum all the discounted payments received over time. t = time of the cash flow, Co is how much cash you start with, Ct is how much cash you have at time t, and r is the discount rate. Obviously the discount rate will drastically affect the project. If it’s a certainty the calculation will be accurate, if it’s an educated guess, well, maybe not so accurate. It’s really much easier to use a financial calculator or Excel, which is why such devices and software was invented. The advantage is that you can use this technique to easily see the effects of interest rates and profitability on the investment.

Investment Analysis Technique 2 – Payback Period
This technique takes a look at how long it will take to recoup your initial investment. It works well when you have little time for an investment to bear fruit and you need to know if it will pay off in the allotted time frame, and indicates when the investment will begin generating positive cash flow.

The downside to the payback period technique is virtually everything else, but critically it ignores the time value of money, something you can ill afford to do on a long term basis. It also fails to account for profitability after the initial investment has been recouped, so it’s not great for projecting long term results. It’s better for firms looking to analyze a capital investment, though. Its greatest advantage is that it’s very easy to use, which is also why it fails on so many other levels. You simply look at how long the return from the investment takes to equal the initial cost of the investment. Bingo!

Investment Analysis Technique 3 – Average Annual Rate of Return
This is similar to the payback period technique in that it looks at the stream of revenue generated by an investment and the initial cost of the investment. To determine the average annual rate of return generated by an investment, you take the net total cash flow that it generates over a specified time period, divide it by the time period, and divide the result over the amount of the initial investment. To include the time value of money, you want to use the compounded rate of return.

If you bought a rental property for $300,000, put 10% down, and rented it for $2,500 / month, your rental income total for the 5 years would be $150,000. To check your average rate of return over a 5 year period, you need to look at your costs over the period. If you got a 6% mortgage for the $270,000 balance, your P& I would be $1,350. If you pay an additional $500 for taxes and insurance, your costs for the 5 year period, including your $30,000 down payment, would be $147,000.  Income for the same period would be the aforementioned $150,000. Your total simple return for the 5 year period would be 2%. Ouch! Taking into account the time value of money for the 5 years, your compounded return would be only .4%, dismal by any standards. NOTE: This example ignores such factors as closing costs and possible rent increases over the 5 year period.

Now a .4% compounded return is nothing to write home about, you could do way better in the stock market or even at Uncle Larry’s dice game, and that doesn’t even take into account any expenses you may have for repair or renovation. But it also doesn’t take into account any appreciation or depreciation on your property, and here’s where real estate investors count on the power of leverage to make their investments pay off. (Considering today’s market in some areas, counting on appreciation may seem foolish, but over the long term the property will appreciate).

Stocks may generate far higher returns and some pay nice dividends, which can be reinvested or used as an income stream for living expenses. With equity investments however, the amount you invest is the amount you invest, and that’s all there is to it. With real estate, you have the principle of leverage that can multiply your results substantially. The rental income provides you with a .4% compounded return, but if the property appreciates at the annual average of 6.3% over the 5 years, you will make out much better, because that 6.3% affects the entire $300,000, not just your $30,000 initial investment.

If the 6.3% holds, your property will be worth $407,181 at the end of the five year period, giving you an unrealized gain of $107,181. If you add this into the equation, it changes substantially. Now your compounded return for the 5 years is a much more favorable 11.8%, and with time will be even more impressive.

Have a great, debt free weekend.

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In this time of record profits, seen by some as reckless profiteering, that are being generated by said oil and gas companies, this strikes many as a fair way to ease their tax burden by shifting it to someone who can afford it far more than they. A larger question is, in this time of increasing unrest in the Middle East, should we be doing something that could possible increase our dependence on foreign oil? We should be striving for energy independence as fast as our national will can take us there.

Taking money out of the oil and gas companies pockets reduces their budgets for exploration and R&D, something that's going to be sorely needed if we are to obtain any semblance of energy independence. An alternative to eliminating their corporate tax breaks entirely, while retaining the appropriate amount of corporate meddling required to engender voter approval, might involve tax credits for research, alternative energy development, and exploration efforts performed by the energy companies.

Now isn't the time to become more reliant on troubled areas we have little control over. With Iran looming as dark force in the region, causing fear among her neighbors and unrest in the international community, we may need those troops we have overseas to ensure our oil supply. In fact some have postulated that our real reason for being overseas, conveniently in countries on either side of Iran, has little to do with coincidence.

As much as some are loathe to admit it, our very economic foundation rests upon a pool of oil, and cheap oil at that. Everything from your getting to work today (even in that Prius you're so proudly displaying), to the delivery of the beans for your morning latte, the road you traveled on, the plastic in everything you touch (including that cell phone you talk on while driving, much to the frustration of others you share the road with), and yes, the energy you're using to keep your computer going as you read this, is all because of that addictive black goo that pours forth from the ground.

If that tap is to run dry, or even be reduced to a dribble, you can kiss goodbye much of the good life you've enjoyed for so long. If that were to happen at the same time as our credit markets are experiencing a mini catastrophe, well, would everyone please hold on to the handrail.

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If you’re facing foreclosure, or fear it could be in your near future, you must avoid foreclosure at all costs. It’s even more important to avoid foreclosure, than it is to keep your home, although both would be nice. Too many people put off the inevitable, thinking it will go away, because they’re paralyzed with fear, or are suffering from analysis paralysis. Get on the stick, people! Foreclosure will impact your credit, and not in a positive way, either. It will dramatically hurt your credit for 7 years. That’s a hell of a long time to have compromised credit. This is especially true in light of tightening credit markets. Interest rates for those with blemishes on their credit, if they can get loans at all, will be dramatically higher than for those with great credit.

So, what can you do if you’re one of those in this pickle? There are 4 broad strategies you can use to avoid foreclosure; pay your mortgage current, sell your home before it falls into foreclosure, rent out your home, and mortgage modification.

1 - How to Avoid Foreclosure – Pay your mortgage current. This is a great solution if you can do so. Unfortunately, it’s often the most problematic. After all, if you could just pay it current, you wouldn’t be in a default situation now.

2 – How to Avoid Foreclosure - Sell your home. This is often tried by many as a strategy for foreclosure avoidance. The problem in many real estate markets is that real estate values have tumbled by 5% - 25%. Too many people are unable to sell their house for what they owe on it. In addition, there is a backlog of homes on the market, and it’s taking longer and longer to sell.

This is the crux of the whole foreclosure problem. Not to preach, but too many people grabbed mortgages they shouldn’t have, purveyed by brokers and lenders with the institution’s (and their own) short term interests at heart, instead of the long term health of the creditor, the lender, and, ultimately, the economy. That was compounded by too few people refinancing into a more favorable long term mortgage product before disaster struck. Now it’s not as easy to refinance, and to many people are stuck in a home that’s worth les than they owe, in a tight credit market, with a mortgage that’s adjusted into one they can no longer afford.

There are options for selling outside the traditional real estate market. No doubt you’ve seen the signs posted to telephone poles throughout the land, like posters for some sick circus, announcing “I’ll Buy Your Home For Cash!” These are typically the taglines of foreclosure investors. Unknown to some, these amateurish, handwritten sighs are, in some cases, actually put up by huge, national corporations. In other cases they are nailed up by small time investors that will purchase pre-foreclosure homes for cash. Either way, going with one of these operations is a better option than having your house foreclosed upon by the lender. You’ll get to retain some of the equity in your home if you have any, and keep a foreclosure mark off your credit. The downside is that typically the investor will only give you a percentage of market value for your home. On the other hand, if market values keep sinking, as they are in some locales, if you wait a few months, the investor’s offer may be right on target!

Therein lays another problem. If you are upside down in your home now, you need to get the maximum sales price you can. You are already going to have to cut a check to the bank for the difference between the selling price of your house and the payoff balance of your mortgage. If you haven’t the cash to do that, you’re in a spot o’ trouble.

3 – How to Avoid Foreclosure – Rent your home to others. If there’s a brisk rental market in your area, you may consider renting. The cash you receive for the deposit and first and last month’s rent may cover your arrears with your mortgage lender. If the market is strong, the monthly rental payments may cover your mortgage payment and even leave you with cash to spare. Even if they don’t quite cover your mortgage, the total of your apartment rental (you’ve got to live somewhere until everything gets back on the up and up) and the rental shortfall may still be less than your mortgage payment. This will obviously improve your monthly cash flow.  Remember though, you’ll still be on the hook for insurance and maintenance, although you will receive some tax benefits as a landlord.

Look at the rental rates for similar properties in your area. Make a budget and include all the costs associated with renting your property. Use this to estimate your monthly cash flow and determine if renting your property is a valid solution to your problem. If you do decide to rent out your house, make sure you screen your tenants. Run a credit check and use an appropriate screening service to check the prospective tenant out thoroughly. You don’t want your money problems to go from bad to worse by having a meth lab or some other criminal enterprise operating on your property. One last thing; don’t forget to check the landlord – tenant laws in your area. Make sure you abide by all these in your foray into being a landlord.

4 – How to Avoid Foreclosure – Mortgage Modification. This may be the best way to go for many. The key here is to be proactive. Call your mortgage company before your mortgage goes into default if you see a problem on the horizon. If they send you letters demanding payment, or statements indicating your loan is about to go into default, for God’s sake, don’t ignore them! Now’s your best chance to take action to save your home, but act you must.

Most lenders really don’t want your house, they’ve got bigger problems to deal with, especially now. They’d rather have some cash flow and another good loan on their books. Their loan portfolio probably looks bad enough already. You may be unaware of this, but Fannie Mae and Freddy Mac, the largest mortgage paper purchasers, and many other investors, actually require lenders to try hard to work things out with you. It makes good sense, investors don’t make any R.O.I with a portfolio full of bad loans and foreclosed properties. You, however, must be aggressive. You will be in a much better position to stave off foreclosure if you are less than 2 payments behind on your mortgage, so get things done before things get that far. Make sure you document all your efforts, and when calling your lender have all your information ready. They’re going to want to see proof of any financial hardship, so have it ready for them.

The bottom line is that you should call your lender at once, before things go too far, to make alternate arrangements for your mortgage. You may even be able to get them to agree to actual mortgage modification, where they’ll change the terms of your mortgage to help keep you from foreclosure. Unless you try, however they won’t go the extra mile. You can also check with the FHA to see if you are able to do what’s termed a partial claim. In a partial claim you get a one time, interest free loan from your loan guarantor to bring your mortgage current. To qualify, you must have an insured mortgage, such as an FHA loan, and be 4 – 12 months behind in your payments, without already having lost your home to foreclosure.

Some other things you should do to keep foreclosure at bay: Make a budget. Stop paying other bills if you absolutely have to. That’s a last resort, but it may help you keep your house. If you really have dire financial problems, your credit cards are unsecured, your mortgage is secured by your house. Not paying your credit cards will mess up your credit, but you’ll still have a roof over your head and credit card default will not stay on your credit as long as a foreclosure. That is a very last resort, however.

Hopefully you’ll never be in a foreclosure avoidance situation, but if you find yourself there, remember there are strategies to help you keep your home.

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In many cases tax payers are either (blissfully) unaware of or have been outright lied to about the massive nature of the cost containment problems (nice euphemism, that) experienced by these transit projects. Too many of these projects are supported by those who deem themselves “progressive” in nature and feel that the “progress” they support justifies their vision of the future, cost overruns and misuse of the people's money be damned.

In Washington State's Sound Transit, the people approved a light rail transit project in 1996 that was projected to deliver to the voters about 25 miles of light rail and 25 stations at a cost of just under $2 billion. The completion date was claimed, at the time of the vote, to be 2006. Shame on the bamboozled voters for believing such nonsense. 2006 was actually closer to the start date of the project. To make matters worse, the scope of the project had shrunk substantially. Now the light rail project will only extend about 15 miles and have just over half the original number of stations in the plan originally sold to the voters. Oh, and the price has risen to over $4 billion.

If you approved a contract to have your next new home built and the project was supposed to provide you with 3,000 sq feet, 4 bedrooms and 2-1/2 baths at a cost of $250,000, and finished in 1 year, you'd be kind of pissed off when the contractor delivered you an abode of 1,800 sq feet with 3 bedrooms and 1-1/2 baths at twice the price in 3 years, no? That's the same way Puget Sound voters should feel now. But wait, it gets worse, much worse. According to the latest plan foisted upon beleaguered taxpayers in the region, to get something like the original plan will require, imagine this, more taxes.

How much of a tax increase you may ask? Well, in a Bostonian like stroke of tax dollar inflation, Sound Transit will ask voters in November to approve a plan that they claim will total over $28 billion in the coming 20 years. About 60% of that will be for transit projects, with the remaining 40% to be for roads. That sounds bad enough, yet opponents claim the actual cost of the projects is actually about $157 billion through 2057. Think about the magnitude of that number for just a second. $157 billion. That is the claimed cost of the project after all interest and inflation related costs have been paid. Proponents deride the number, claiming that it's just not fair to include interest and fees. They claim that the transit authority has the ability to reduce taxes after construction has been completed in 2027.

Give me a break, please. For one thing, why would you not include the entire cost of the project, including the interest and fees to be paid by the taxpayers for the life of the bond issue, in your cost projections? There's only one reason, to try and slip this boondoggle past the voters, just like they did in 1996. When you buy your next house, you're not really concerned about the interest on your mortgage, are you? The Sound Transit proponents are using a well worn tactic practiced by car salesmen the world over. Don't get them to look at the total cost. Forget the interest and just look at the shiny new car parked outside the showroom. Don't buy it!

Even if the the $157 billion estimate is too high by half, Washington taxpayers will still pay $60,000 per household to finish the project. For that kind of money, they could hire a car and driver to take them to work. The thing is, I suspect it's not too high by half. Looking at the problems that plagued the projects in Boston and LA, in addition to the problems facing the Puget Sound project to date, it's probably too low, if anything. Seattle's King 5 News had a program by Investigative Reporter Robert Mak describing the potential consequences of the latest rapid transit project to be put before the voters (taxpayers). See his blog about the program Up Front with Robert Mak, here. At this rate Washing State taxpayers will soon be paying a 10% sales tax.

In Chicago the city has been plagued with cost overruns and delays on the area's CTA projects for years. The latest involve the $150 million overrun of the originally $213 million Block 37 station. It';s only the latest in Chi town's transit overruns.

On a percentage basis, the king of transit related cost overruns is Boston's “Big Dig”. This massive project swelled from the originally projected $2 billion to over $14 billion at the time of the project's completion. The astounding omission of the Fleet Center in the preliminary design drawings (Cost to rectify, $1 million) to other design related overruns and scheduling problems alone directly accounted for, according to a Boston Globe investigation, of over $1 billion in excess costs.

When will voters wake up and realize that they are being lied to on a daily basis about the scope, costs and completion dates of almost every major transit project. If you're a Washington State resident, and your retirement account is too low, wouldn't an extra $60,000 be nice?

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Now, I'm not saying there aren't advantages to getting a debt consolidation loan for high interest debt, mainly of the credit card variety. In fact, it can be a solid financial choice for some. However, it's also a choice that could send you straight to financial hell if you aren't careful. You're probably well aware of the benefits of these types of loans, so lets touch on the seedy underbelly of the whole debt consolidation idea.

Reason Not to Get a Debt Consolidation Loan #1
The reason you get a lower interest rate with a debt consolidation loan than you have for most credit card debt is because the lender has some collateral to ensure the security of the loan. In the world of finance, when the risk for a lender is lower, the interest rate tends to as well. In most cases the security they'll have for your loan is real estate. For 99% of the people who get such loans, that real estate is their home.

That's right, the place where you raised your kids, threw the football around, taught them to ride their bikes and have so many fond memories is the collateral for your loan. That means, should you default on it for any reason, you will lose your house. That's a pretty huge reason to think long and hard before entering into such a loan agreement. If you don't have the financial problems behind you that caused you to amass such a large pile of debt in the first place, you'll be putting yourself at major risk for living under the overpass, or at very least having your house sold out from under you to satisfy the debt. This is so vitally important bears repeating. Get your financial house in order, most importantly your spending habits, before you even remotely consider a debt consolidation loan.

Reason Not to Get a Debt Consolidation Loan #2
Even though the interest rate is, in most cases, substantially lower than you have with your credit cards, you amortize the credit card debt over a 4 or 5 year term, where the debt consolidation loan is much longer, usually 10 – 30 years. This, coupled with the lower interest rate, is why your monthly payments are so much lower. While this may greatly improve your monthly cash flow situation, it will most likely cause your total interest payments to be much larger than they would have been had you simply paid off your credit cards in the shorter term required by your credit card agreement. This supposes that you actually stop using your credit cards, however. In many cases, people simply won't do this, causing the disastrous financial side effect in reason number 1 above.

Before you consider a debt consolidation loan there are other steps you can take to help yourself financially. The first is to call all your credit card companies and negotiate lower interest rates and a better fee structure. If you aren't in default and you have a good payment history with them many will do this, especially if you threaten to take your business elsewhere. Never underestimate the power of a big stick in your negotiations. In many cases, this alone will result in dramatically reduced monthly payments. The secret is to continue making the original payments, if you can afford to Now you'll be on track to become free of that pesky credit card debt in a much more advantageous time frame.

Next, see if you can get an unsecured loan to repay the credit card debt. If you can do so at a lower interest rate than your credit card companies are charging you, you'll be ahead of the game. Even better, you will have gotten there without risking your house or landing yourself on a lengthy amortization schedule. Another benefit of this form of consolidation is that you gain the convenience of a single payment, which is far easier to manage and reduces the likelihood of a missed payment, and all the problems one can cause. In any case, you should have your credit cards on auto pay to eliminate the risk of a missed or late payment, which can send your card's interest rates skyrocketing, not to mention the fees you'll incur.

Have a great weekend, and good luck on your quest to get debt free.

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There are, however, some government programs that can help you repay your student loans. The catch is that you'll have to put that fancy Wall Street or corporate career on hold for a while and eat from the public trough for a while. That's right, in most cases, you have to get a government job in order for Uncle Sam (or any of the states) to assist with your student loan repayment.

Civil Service Student Loan Forgiveness
Here are some of the places you can get government help to pay back some of the student loans you have accrued in your quest for enlightenment. Which type of student loan you have will help determine which repayment or forgiveness program you're eligible for. If you're feeling charitable and want to see the effects of your generosity assist others around the world, you can join the Peace Corps. By so doing, you'll be eligible for deferment of Stafford and student consolidation loans, but your real benefit from a student loan perspective would be the ability of Peace Corps volunteers to have up to 70% of Perkins loans forgiven. The actual forgiveness amount depends upon your length of service, and accrues at 15% per year.

If you want a job where you can sleep in your own bed every night, without worrying about mosquito netting, there are many other government programs that can help with your student loans. If you are a clinical researcher, the National Institute of health offers a series of loan forgiveness programs. One catch is that you must have a doctoral level degree and work for at least 20 hrs a week per quarter on various types of research, including pediatric, contraception and infertility, and clinical. If you meet the conditions, you be eligible for a substantial $35,000 per year repayment of your federal student loans. For all 5 NIH repayment programs, see here.

Teacher Student Loan Forgiveness
You can get some great student loan forgiveness benefits by entering the education field. In some cases you'll need it. As with research positions, forgiveness from the Department of Education is determined by which type of student loan(s) you have. Many of the programs give benefits for teaching in disadvantaged or low income schools. In many inner cities or small, rural communities, this includes just about any school you'll work in.

Another student loan forgiveness program available through the Dept. of Education includes the Teacher Loan Forgiveness Program. This one makes available up to $5,000 in student loan forgiveness for direct and FFEL loans. It’s mainly targeted at teachers in the fields of math, science and special education, as teachers in those disciplines can be eligible for up to $17,500. The conditions of eligibility include receiving your loan after October 1, 1998 and being employed full time as a teacher for 5 consecutive years. To read the full list of qualifications and eligibility, click here.

Military Student Loan Forgiveness
Another place that you can seek federal aid for your federal aid is by joining the military. A noble and difficult profession, you’ll not be greatly financially rewarded by such a career choice, so some help repaying your outstanding loans would probably be welcome. In many cases, you must be aware of the programs before you enlist to be eligible, so check up on them first. There are many government programs that will forgive part of your loan, or in some cases discharge it altogether.

One is for loans received under Title 4 of the Higher Education Act. This makes those serving in the military eligible for partial loan forgiveness if they served in an area of hostilities for at least one year and have a Perkins loan or a National Direct Student Loan. Of course you’ll need to fill out a government form to see if you are eligible for forgiveness. You’ll need to send a copy of your discharge papers and a letter of explanation to your loan servicing agency, where it will be reviewed, and then sent to that room at the end of Raiders of the Lost Ark for storage.

Other loan forgiveness programs for military veterans include the Army repayment program. This is part of the Montgomery GI Bill enacted at the end of WWII. In this case the Army will repay a portion of your student loan directly at the rate of 1/3 of your outstanding balance for each year of eligible service. This applies if the loan was not in default when you entered the Army, that you enlisted after 30 September 1982, that you enlist in a critical military occupational specialty, and that you have a valid high school diploma at the time of enlistment. Stafford loans, Perkins loans, SLS, William D. Ford loans and PLUS loans all qualify. Even consolidated student loans are eligible if they are in the student’s name.

If you have a personal loan, an equity loan, a loan from an educational institution, or if you consolidated your student loans in someone else’s name (such as your parents), you are not eligible for the Army program. Check to see that you loan is covered under parts B, D, or E of Title 4 of the Higher Education Act before you sign your enlistment agreement if you want the Army’s help in repaying your loans. Make sure you go over the terms of your loans and their repayment completely with your recruiter before putting pen to paper. You don’t want to enlist with the idea that the Army will be repaying all or part of your loans, only to discover that you’re still on the hook for the monthly payments, and you are now on a 2^nd lieutenant’ salary.

Chapter 1606 and 1607 of the GI bill apply to reserve and National Guard members. Chapter 1606 provides for monthly repayment of education expenses regardless of service, while 1607 gives increased benefits for those who served in the Guard or reserve for over 90 days of active duty ($400/month) or 1 year ($600/month). If you are eligible for educational assistance under chapter 1607, but stop drilling, you will revert to the money paid under 1606 for the length of your deployment plus 4 months.

Other Student Loan Options
There are many other government programs that can either repay or forgive all or part of your student loans. I’ll address some more of them in a future post. In addition, you may benefit from student loan consolidation. As with other loan consolidations, you’ll have only one payment to worry about, and you could get a better interest rate. That will obviously lower your monthly payment and possibly allow you to quit that second job you’re saddled with now.

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I was not looking to maximize the value of my house in the hope that its value would continue to appreciate, netting me a handsome profit in the future. This would occur after I had my house payments held artificially low through the use of an option ARM or interest only mortgage. It appears as though many homebuyers, in the interests of getting into the largest house they could manage, simply did so without any thought as to what would happen when their mortgage adjusted, or their balloon payment came due.

Now we’re in a situation where we have to have a massive, taxpayer subsidized rescue effort in order to keep the real estate market from being flooded with foreclosure properties. The Fed’s rumored to be dropping the federal funds rate from 5.25% to 5%, or possibly 4.75%. This would give some measure of protection for those who haven’t yet had their homes go into default because it would drop ARM payments. Maybe help for mortgage holders is on the way.

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It seems that even within the Fed, there are differing opinions on the direction faced by the U.S. economy and risks faced by consumers (you) in the coming year. If the esteemed directors of our federal reserve bank can’t agree on where we’re going economically, how are you supposed to plan for your financial future?

According to Fed Governor Frederic Mishkin and the head of the San Francisco Fed President Janet Yellen both seem to have a pessimistic outlook on our immediate economic future. Mr. Mishkin stated "consumer and business spending also could be damped as a consequence of the recent financial turmoil" The timing of such pessimism, directly before the traditionally busy Q4 retail season, might give consumers pause before they head out to max out their credit cards yet again. Keeping Americans from going even deeper into debt would be a good thing, but, in the short term could give rise to all manner of economic problems, especially when combined with the troubles faced by the lending industry of late.

Mishkin and Yellen may be basing their opinions on the Fed report from July indicating that consumer credit slowed substantially over the same period a month before. Overall consumer credit showed a 5.9% growth rate in June, but that plunged to a 3.7% clip for the month of July. The 37% decline in month over month growth in consumer indebtedness may actually portend increased health in consumer spending patterns, for as sure as the debt financed spending has driven the economy to new heights, it hasn’t helped many Americans personal financial picture. Even more ominous for many Americans personally, the revolving (credit cards, store accounts) sector of the consumer credit report indicated substantial growth (6.6%), while non revolving credit (HELOCs, mortgages, car loans) showed much slower growth, at 1.9%.

It seems too many feel leverage is the name of the game. Sadly, the majority are leveraging birthday presents, travel and new goods with which to fill up their homes. This is leverage to indebt, rather than leverage to enrich, a much more appropriate use of the most powerful of financial and business principles.

Within the Fed, there remain those who are hopeful on the direction of economy as a whole, however. Flying in the face of the pessimism shown by their partners in New York and San Francisco, the main man at the Dallas Fed office, Richard Fisher, indicated he was encouraged by the economic trends, and saw strong economic conditions in the future. Charles Plosser of the Philly Fed office seems to be feeling more like many of you, a bit confused about the direction of the U.S. economy in the near future. He indicated there was “conflicting data” about where the economy was headed.

If the Fed overcomes their confusion and lowers the interest rate an additional quarter next week, as many analysts and economists are foreseeing, where does that leave you, the consumer? If you are looking to get a mortgage or other consumer credit, and are able to qualify, it leaves you in a pretty nice position, actually. The interest rates for major types of financing continue to show declines for those who the lenders are allowing to qualify for credit. HELOCs are showing rates about a tenth below last week, mortgages of all types are showing at least that much of a decline, and auto loans edged slightly lower in the past week.

Those in the market for a vehicle may be able to grab one of the low interest financing deals that pop up at the end of a model year if they have no troubles driving a car at the end of the model year. When making your financial calculations before you buy a vehicle (you do work these things out before you buy, don’t you?), don’t forget to factor in the added depreciation you’ll experience because you are driving a vehicle that’s basically a year old as you drive it off the lot.

An additional drop in interest rates may give the stock markets a bit of a boost, although most investors have probably figured it into their market activity already. The aforementioned Mr. Mishkin votes on the Fed interest rate committee and if the Fed does cut rates, as most seem to be expecting, it could be time to take advantage of the lower interest rates for consumers, but not by boosting the amount of their credit card debt. If the remarks by Ed Hyman a few weeks ago turn out to be true, it could be just the latest in a continued string of Fed interest rate reductions.

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There are some legitimate reasons for leasing your next vehicle. For instance there are tax advantages associated with leasing if you own a business. Some people just prefer to drive a new car every 2 – 3 years, depreciation be damned. Cars and trucks are making major advances in safety, economy, drivability (impressive, considering what porkers many vehicles have become), and content (a major cause of the added pork) in that time period, so there may be something to be said for that train of thought. There are also some folks who like the idea of keeping the monthly cash out of pocket low, even if that means a lease and it doesn’t happen to be the best financial course of action.

On the other hand, cars today last longer than ever. Remember 25 years ago, when a car with 100,000 miles on it was all used up? That’s definitely not the situation anymore. These days vehicles with that many miles are just reaching middle age. They drive great, have no squeaks or rattles, the interiors and exteriors look almost new, and there’s not a hint of smoke from the tailpipe. Unless your requirements have changed, why would you need to replace them with something newer?

If you are determined to lease, you should at least know what the F&I guy at your local car dealership is talking about when he starts into his pitch. There are some terms associated with leasing that would behoove you to know. Here are some lease terms:

Money Factor –
Not the interest rate of the lease. To get the approximate APR, multiply the money factor by 24.

Residual Value –
The value of the car at the termination of the lease. This is an estimate only. When you lease you are effectively financing the difference between the Purchase price and the residual, so this will have a major effect on your lease payment. They are always calculated as a percentage of the vehicle’s MSRP. It doesn’t matter how great of a negotiator you are. Even if you get the salesperson down to a dollar, you’ll have to congratulate yourself later, as the residual value of your leased vehicle will still be determined using the MSRP. That percentage however, can be set at virtually whatever the leasing company would like.

The higher the residual value is set, the lower your lease payment will be. Cars that have traditionally good resale values have higher residuals. These are often better choices to lease than those vehicles that lose a higher percentage of their value and thus have a larger difference between MSRP and the residual.

Closed End Lease –
This type of lease allows you to walk away from the vehicle at the end by dropping off the keys and paying any associated fees, such as excess mileage charges. If you have a closed end lease, you can purchase the vehicle for the residual amount at the termination of the lease, so there is a bit of incentive on your part to choose a vehicle where, in your area, they tend to have a high resale value. If you are able to end up with a vehicle that’s worth more at the end of the lease than the residual value, you can get a great deal, as you can buy it for the residual value, even though it’s worth more than that. If it’s worth less, it’s no skin off your nose, you just walk away from the vehicle.

Cap Cost – This is the amount the leasing company purchases the car for from the dealership. Here you can negotiate for a lower price on the car, and it will make a difference.

Cap Cost Reduction –
What it sounds like, except that you have to pay for the privilege. You are basically helping the leasing company buy the car by kicking in some cash of your own at the inception of the lease. So much for “No money down.” This amount can be thousands of dollars.

Vehicle Leasing Fees to Avoid –
There are some fees associated with vehicle leasing that you should fight tooth and nail to avoid paying, although you may get stuck with some of them anyway. Two of these are the acquisition fee or origination fee, and the disposition fee. The first is basically a fee paid by the car lessee for taking out the lease. That’s crazy, and pure profit for the leasing company, as if they’re not making enough off of you. Refuse to pay it. They may insist on it, but hold your ground or get the dealer to absorb it. You don’t need the car that bad, in most cases.

The disposition fee is another fee you should refuse to pay, but since you’ll not have to pay it until the end of closed end lease if you don’t buy the car, you may be completely unaware of it. That’s why you should actually read all that fine print mumbo jumbo in the lease contract. It’s almost always in there. Make them take it out, unless you’re pretty damned sure you’ll be buying the vehicle at the termination of the lease.

One leasing fee you’ll probably have to agree to is the early termination fee. Unlike the prepayment penalty on your mortgage, you most likely can’t get out of agreeing to this one before you sign the lease. Early termination fees are huge, so be aware of them. If you have to end the lease before the term is up, but near the end, it may actually be cheaper to keep the thing in your driveway, rather than turn it in and take the bath.

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I just had the house down the street from me go on the market for about 5-7% higher than many predicted it would list for. It's a 40yr old, 3 bed / 1.75 bath rambler at about 1,300 sq feet. It has a nice large yard with entertainment deck and kid's play set, some quality improvements inside, such as tile kitchen counters, nice baseboards and freshly refinished hardwood floors. The asking price is $344,777. If they sell for anything close to that figure it would sure help the property values for the rest of us on our little street. They did many of the things that experts advise when trying to sell for top dollar. These are all the standard things you should try. After that we'll get to some of the more unconventional items.

Curb appeal -
Good first impressions are vital when you're trying to sell your house. I've posted on the importance of this before, and it bears mentioning again. You want to ensure that prospective buyers at least get out of their real estate agent's RX350 and take a look inside. Remember, in many cases their agent has never seen your house before either. You want to clean everything until it's spotless, make the front yard look great (even if it means spending a few dollars on landscaping) and make sure the porch area is inviting. The front door, the door hardware and all sidelights and windows around the front door should be in great shape, with no cracks or peeling paint. Ditto the porch and sidewalk. Unless you're going after the investor or the sweat equity buyer (not a very large chunk of the market), those areas can be a major turn off for buyers if they are in a state of disrepair.

Inside the house -
There's a reason so many new homes have soaring entries and dramatic staircases, even if the size of the home doesn't seem to warrant it. Home builders know how to market their homes, and they've found that the impression it creates on prospective buyers helps the home sell. You may not be able to create such a space if your house doesn't already have it (trust me, that's an expensive remodel and you won't get the money back), but you can use the same principle on your house. As with the front exterior, you want to be sure the interior first impression is favorable. Refinish the entry hardwoods, install new tile, and/or paint. If you've got a ratty, old light fixture in the entry, replace it. The $50 you spend at Home Depot will be well spent.

Clear out as much of your furniture as possible, especially if it doesn't match ( I know you prefer to term it an “eclectic collection”, but everybody else will see it as a junky mess), get the pictures off the walls and paint them (the walls, not the pictures) to hide the fade marks where those images of Uncle Harry, Aunt Jean and the kids were hanging for the last 10 years. You want people to take mental ownership of your home as soon as they walk inside and pictures of someone else's family don't help them to make that leap. If you have any colors that are too far removed from the norm, cover them with a fresh coat of Benjamin Moore in a more subdued hue . You're trying to appeal to the widest number of buyers there, Ace. Mazda's marketing plan of making products that a few people really like, as opposed to the broad market liking a little bit, doesn't translate well to the real estate industry.

Your real (estate) selling plan -
Now that you've handled the basics, you may have to get a bit more creative. Hopefully your home will sell quickly. If not, you may have to resort to some more creative selling tactics. One thing many people want to do if their home doesn't sell quickly is lower the price. While that may do the trick, it may just create the perception that the house was too expensive, and may not be worth what you're asking, even now. You need to find and overcome the buyer's objections. In many cases, it's not so much the price itself, especially if you priced it fairly from the start.

More often the problem either the monthly payment or the amount of cash they buyer must come up with in order to make the purchase. Here's where you can help. You can drop the price, but that doesn't really help the buyer with either the monthly payment or the down payment unless you give away the farm, something you'll not be well served doing. To help the buyer and avoid giving a steep discount that takes much of the profit out of your pocket you can try various strategies.

One would be to pay for all or part of the buyer's closing costs. That will set you back a few thousand dollars, but it helps the buyer avoid coming up with so much cash out of pocket. With the evaporation of no down payment financing and other creative mortgage products, this is a strategy that can pay nice dividends for you.

Something else that can help the buyer in their hour of need is to take a page out of the builder's marketing handbook by offering a buyer bonus. Rather than dropping the price $15,000, try using the cash as an incentive to help the buyer into your home. Give them a $10,000 buyer bonus instead. You'll spend less and they'll gain more. Remember, dropping the price on your home doesn't really give a commensurate drop in the buyer's monthly mortgage payment. For example, the monthly principle and interest payment on a $300,000 mortgage at 6% is $1,798. If you drop the price on your house $20,000, it lowers the payment by about $120 a month. That's not an inconsequential amount of money, but it probably won't make a huge difference in the monthly budget of most home buyers. Most people would rather have $15,000 cash in their pockets.

If you want to help the buyer lower their monthly mortgage payment, you could use what's called a buy down to lower the interest rate. That will be a more effective way to lower the monthly payment, and cost you less money at the same time. You'll pay points to lower the interest rate of their loan. You can either make a buy down for the entire term of their mortgage, or for only the first few years. A buy down for the first few years is usually termed a 3-2-1, 2-1 or some variation of that. With a 3-2-1 buy down, the buyer's interest rate is 3% lower the first year, 2% lower the second, and 1% lower the third. After that, it reverts to a standard, fixed rate mortgage, at the standard 30-year rate, for the remaining 27 years.

It is also more cost effective for you than simply lowering the price of your house by $15,000 - $25,000. For example, in the $300,000 / 6% scenario above, you would give the buyer a 3% loan for the first year, a 4% for the second and a 5% for the final year of the buy down. In year one, rather than a monthly P&I payment of $1,798, the new home owner would pay only $1,265, a monthly savings of over $500. You'll pay a hair over $13,000 for the buy down. It's obviously cheaper for you to pursue this strategy than to chop $15,000 - $20,000 off the price.

Lastly, don't forget to use all the Internet resources available to you when it comes time to sell your house. Social networking sites myspace, digg, redditt, stumbbleupon and the like can all be used to help spread the word about your abode. Don't neglect YouTube, either. In many cases, you'll be better positioned than your realtor to market in these unconventional ways. Happy selling!

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First of all, there’s a great chance you’ve gotten those free vacation offers. It sounds like a great deal, but, and you should know this by now, there’s no free lunch. In almost every case, you’ll have to give up something to get your free days of relaxation, and it won’t be very relaxing. In fact, you’ll probably need a good vacation after jumping though all the hoops most of these offers require. At the minimum, you’ll have to sit through a boring presentation about the virtues of timeshares.

Usually, the situation will rapidly degenerate into a scene reminiscent of your last trip to the used car lot; a high pressure, overly persuasive sales person trying to get your John Hancock. Don’t do it! For one thing, you’ll probably notice that for every time you say “no!” to that vacation club membership or time share they sweeten the deal. The price will go down, they’ll throw in more perks, or both. If you’re of a mind to sign the contract as the deal gets more attractive, you should let some common sense back into the room. Never sign a lengthy (or a short) contract without letting your attorney review it first. You could easily live to regret it.

Now, about that free vacation they promised you as an incentive to get you into the room in the first place. For one thing, unless you read the offer carefully, you may be unaware that you’ve got to sit through the sales pitch; shame on you. You’ve got to read this stuff. About the free aspect; you’ll find in the majority of these offers, many of the vacation essentials are far from free. They’ll be coming right out of your wallet, or getting added to your credit card balance. Nothing important you’ll have to buy, just niceties such as rental cars or other transportation, food, anything but the most basic hotel room, etc. In some cases you may even have to pop for air transportation too. In addition, your accommodations may be not what many among you would term desirable. The other problem these jaunts are known for is horrific scheduling. Like to fly at 4:00am? Me either.

The bottom line is that, unless you’re a glutton for punishment and copious conditions, pass on the “free” vacation offers in most cases, you’ll probably enjoy yourself much more if you stay home and paint your bathroom. So, if you do want to save money on vacations, what can you do?

Timing and Research is Everything –
In most cases you can do yourself rather well by taking a few days to really hunt for bargains. Here’s where that high speed Internet connection can pay for itself in a hurry. In many cases, you can scoop up last minute deals as companies try to rid themselves of unsold inventory, weather they’re airline seats or hotel rooms. Visit not only travel related sites such as Expedia.com and Travelocity.com, but sites of the air and hotel providers themselves. Also if there is a major convention in town, you may want to seek out another location. You could get stuck paying convention prices for everything, and many of the hotels and attractions will be crowded and difficult to get into.

Intro specials–
New resorts often offer introductory pricing and package deals as an incentive to bring people in. Sometimes these are really fantastic deals, but you can often do even better yourself, if you’re willing to put in a little leg (or mouse) work. One thing you want to do when trying to score a really cheap vacation is to make sure you’re not visiting during peak times. In fact you want to be there when they’re dying for visitors. Find out the lowest travel season is for the destination you’re planning to visit. In some cases, you can narrow it down even further. You can find the lowest demand period down to a few weeks, and plan your vacation for these times. No resort or hotel wants to have unsold room inventory. They obviously generate no revenue for the property, so they are looking to get them filled and generate enough revenue to pay for the cleaning. If you can make that happen, you’ll be the answer to their prayers.

The Good Stuff –
Steer clear of the most popular resorts at popular destinations. In almost every area there are hotels that aren’t quite as popular as some of the rest, but still offer great accommodations. These will be your target. Also look for hotels associated with larger properties. In many cases these will have fewer amenities than their larger, more popular cousins, and far lower prices. The great thing is that, in many cases, they are right down the block or across the street, and you may get full use of the facilities at the larger property. It’s definitely worth checking on.

If you don’t mind a little additional hassle, and you plan on being in a specific location for a week or two, try using the phone after you arrive. Call around and check on specific room rates, you may be able to move. I’ve personally seen huge luxury suites, a block from the beach in Waikiki, go for as little as $75 a night, and rooms with a fantastic view of the beach, right across the street, be had for as low as $45. If you are going to stay longer during a hotel’s slow times, you have more bargaining power. You’ll be generating revenue for them during an off time, and they’ll than you for it.

Food -
See if you can get a room with a kitchen(ette). One of the largest budget busters on many trips is food. Sure, you want to splurge on gourmet meals every night, but if you can cut that back a bit and cook you own, your vacation budget will shrink drastically. Stop by the local grocery store and shop for food instead of eating every meal in a restaurant. Even better, investigate the local warehouse food stores, you save even more cash there.

Discounts –
Make sure you get all your discounts. Check everything in your wallet; AAA, credit cards, and corporate discounts. Many times your employer will have arrangements with different providers of travel related items, such as rental cars, restaurant chains or hotels. You can also get discounts for using certain credit cards to book your flights and rooms, but be aware of the conditions that sabotage your efforts. Many times there are discount right under your nose that you could have taken advantage of if you’d have only known you were eligible for them.

Stick Around –
You could save big money and much of the vacation related hassle, if you minimize one of the largest budget and pain inducing components; travel. Face it, airports and highway rest stops are not the best places to spend your vacation time, so don’t. No matter where you live, chances are there are some fantastic places right in your own backyard. If you can drive 2 – 3 hours and get to one of them, you’ll eliminate many of the nightmares and much of the expense of your vacation. Many people don’t even consider this they are so focused on getting away from everything. Many times the best getaway is right under your nose. Check it out!

Call Ahead –
Make phone calls to the local chamber of commerce and tourism agencies in your selected destination areas. You’ll be amazed what they’ll offer as incentives to attract visitors to their communities. From little items such as maps and restaurant guides, to discount coupons and a list of places you can visit for free or cheap, such as state and county parks and zoos or wildlife parks, they can be a great resource. These agencies are looking to build repeat vacationers to their communities, so let them do their job. Take them up on some of their offers.

Make Sure Everything is Ready to Go –
The devil is in the details. In the case of your vehicle, that’s really true. If you plan on traveling more than a hundred miles or so, get you car / truck / SUV checked out and change the oil before you head out on the road. An unneeded repair will bust your vacation budget in a hurry, and there may not be anything fun to do next to the repair shop. If your car needs a major repair and you find out about it before you leave, you may be spending your vacation budget on the fix, but at least you’ll be doing it before you leave, at your chosen auto care provider, not the closest one to the site of your breakdown.

Check Everything Out First –
Don’t wait until you get to the area to decide what you’ll be doing there. Check out the major (and minor) attractions first. Have a plan. Browse the net at not only the major sites and the community sites, but look at forums to hear from people that have actually been to the places you’re considering. It’s always nice to have a bit of input from someone whose been there before. You can find what restaurants to visit and which to avoid, attractions worth seeing, and great deals and discounts you might otherwise have missed.

Financing –
One last thing. If you have to put your vacation on a high interest credit card or use a home equity loan to pay your vacation, reconsider. Sucking equity out of your house to pay for a few days of relaxation is the recipe for shot term fun at the cost of long term disaster.

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