Did you trade in your clunker for a new ride?

Many Americans are now driving new vehicles. Cash for Clunkers is over, and the dust has now settled on this government funded program. We would love to hear from you on your experience trading in your clunker. Are you happy with your new purchase? Did you get a smoking hot deal on a new car?

Most importantly, we would like to know how does this new purchase change your family’s budget? Have you noticed that you are now spending less money for gas? Is this newer and higher payment putting more strain on your budget?

The government had a goal to put more efficient vehicles on the road, but we would like to know if the temptation of a great new car deal is putting a long term strain on your wallet.

If the current economic stimulus plan continues its slow run through congress, and is signed by President Obama, it is being reported that the average American will receive an additional $8 in their paycheck per week.  This probably will not change your financial situation, but if used properly this can add some relief to your household.  It is important to think about where you need the most relief in your budget and apply this money accordingly.

The extra $36 a month can add some help making a car payment, buy some summer clothing for your kids, or bolster your rainy day fund (that you may be guilty of dipping into lately).  However you find fit to spend this extra money, make sure you are applying it to your area of most financial pain.

Using the stimulus plan to dine at more expensive dinners may not be the best idea in such a turbulent economy.  I don’t think that is what President Obama had in mind when he started his political campaign for a stimulus plan.  A better idea would be using the money to pay off your monthly electric bills, cell phone bill, or help make your minimum payment on your credit card.

This plan will hopefully add some relief to the average American family.  Unlike the last stimulus package 1 year ago that gave you several hundreds of dollars in one large check.  Didn’t it felt great to receive such a big check for doing nothing but paying your taxes?  Do you remember how you spent that check?  I know plenty of people that ran out to Best Buy and bought a brand new Plasma TV or used it towards a summer vacation.  Of course that does help the American economy by putting money back into businesses, but it does nothing to help the American family get out of this rut and learn how to budget.

Break it down to the basics of budgeting. When you want to help teach kids to budget, do you give them a months worth of allowance at once?  Probably not.  Most likely you will give them small chunks each week so that they can learn the value of each dollar.  That is what the government is hoping to do, and I think it has a better chance for success.

Stay tuned to the news to find out if this bill will pass.  If you really need more help with budgeting and getting out of debt there are some links on this blog that can help.

Like many things in life, the holidays should be approached with a plan. The first thing that should be done is to start saving money early on. It is very difficult to find a large chunk of money that can be spent on presents in November and December. If you start to carefully plan in January, you can estimate how much money you will be spending on presents. Once you have established an amount, you can then start saving a little each month in order to have the money available when you do your holiday shopping. As an example, if you plan to spend $1,000 total, you can save $100 a month from January to October. This will give you the $1,000 dollars by November.

We have all been bombarded by media ads on gifts for the holidays. This will often start in the summer months when retailers advertise “Christmas in July” sales. Although this may be extreme, we can learn some things from it. Shopping throughout the year can allow you to take advantage of sales. This can also help relieve a lot of stress by having to rush and shop as the days fly by. As an added bonus, you also get to avoid the malls and the crowdsthat go with them. I try and have all of my shopping done by the end of October so I do not have to visit a store other than for groceries.

Most importantly, it is always a good to remember that the Holiday’s are not about spending money, it is about quality time spent with the ones you love. This does not mean that you do not have to give out presents, but you can create something that means more than anything you can buy. The best part is that you can do it at almost no cost.

Choose a family member name this Christmas. That way you will have an entire year to complete your gift. Start by writing a letter, which can include fond memories you have ofthem, something that they taught you, how you have benefited from that or how you have been able to pass it along, a funny story they told, or just why you are so happy that they are in your life. Wrap your gift in a simple piece of aluminum foil and put a bow on it.

This may seem like a simple gift idea but it can truly touch the individual that receives it. That is the meaning of the Holiday spirit.

Look around the house for things that you already own and use them to make a new costume. If money is short, you can always take an old white sheet and cut some eyeholes in it. I know it sounds cliché but you can put your own twist on the Ghost idea. Begin by cutting out holes for the eyes and a small slit for the mouth. Next, dress it up a little. Use eye shadow and lashes around the eyes, and put some lipstick for the mouth. Take your blush and add a little color on the cheeks. Get some cheap costume jewelry from a dollar store and wear earrings and a necklace. For the men, you could color in a beard or mustache. You do not have to use a white sheet you can use a different colored or patterned fabric to make a truly unique ghost.

Another simply costume is a scarecrow. Start by taking an oversized flannel shirt and matching it with some old blue jeans, preferably with patches on them. Use a rope to tie the cuffs of the jeans and the sleeves. Stuff the shirt and the pants with old wads of newspaper and then add a little bit of straw to hang out of the jeans and the shirt. A little bit of make up can finish the outfit off.

Another creative and cost effective costume is to dress up as static cling. Wear any solid color such as white or black. Then all you have to do is use safety pins to pin random garments like socks, underwear, and fabric softener sheets to your clothes. Finish off the look by sticking your hair straight up.

Children’s costumes can also be made from items you already have around the house. If they have an all black outfit, they can easily become a skunk with a white stripe put down the middle. A pink outfit can be turned into a bunny with a pom-pom on the backside and a set of construction paper ears. A green outfit can magically become a turtle with a piece of green poster board, cut in the shape of an oval and painted to look like a Turtle shell. If you are not into animals, go as bunch of grapes by wearing green or purple sweats and then attaching matching balloons of the same color.

The secret is being creative. If you are not creative then cheat a little. There are websites that have free costume making ideas. This way you can utilize whatever you have around the house. By making your own costumes, you not only get to have the fun of wearing it but you get to have fun making it as well.

In 1994, less than 5 percent of all new home loans were subprime loans. Meaning you had to have great credit to buy a house. Most of these mortgages were 30-year fixed rate mortgages. This allowed the homeowner to know what their mortgage rate was going to be year after year. By the year 2006, 20 percent of home loans were subprime loans and they know represent $1.2 trillion dollars of outstanding loan mortgages. In 2006, 80% of the subprime home loans were 2/28 ARMs. They are called 2/28 ARMs because the first two years are set at a specific rate. Normally, this is a teaser rate and can be much lower than the normal market rate. After the first two years, the interest rate is reset to a new rate based on the current LIBOR rate. This causes the mortgage payment to significantly increase. The interest rate continues to be reset every 6 months. Most of these mortgages also have clauses in them stating that the rate cannot drop even if the LIBOR rate goes down. This means that those individuals with ARMs are going to keep paying more and more for their house.

When a majority of these subprime loans reset, homeowners found themselves in a very difficult situation. They now had a mortgage payment that is several hundred dollars more than where it began. This has caused many individuals to fall behind on their mortgage payments. According to estimates by the Center for Responsible Lending, they estimate that one out of every five subprime mortgages made in the years 2005-2006, will end in foreclosure. In total, they estimate that 2.2 million homes will be foreclosed from subprime loans originated between the years 1998-2006. Nationally, there were 246,000 foreclosures in August. This was a 36 percent increase versus July and a 115 percent increase over August of last year.

Many of the homeowners who got subprime loans in the years 1998-2004 were able to refinance their mortgages because of the significant appreciation in the value of their homes. Now the market has cooled and homes are not appreciating nearly as fast as they were several years ago. This leaves many homeowners who got in towards the end of the recent housing boom with little equity and little chance to refinance their homes. If they are able to refinance their home, it is usually in the same type or high-risk loan, which will only delay the inevitable. So what should homeowners do if they find that they can no longer afford their mortgage payment?

First, homeowners should contact their lender. In approximately 50 percent of cases, homeowners do not contact their lender when they begin to have financial difficulties. Lenders do not want to be property owners. Foreclosures are expensive to lenders because they lose money. Many lenders are willing to work with the homeowner in order to help them stay in the home. Many lenders will offer different types of loan modifications such as temporary or permanent interest rate adjustments, relaxing or extending loan terms, converting the loan from an ARM to a fixed mortgage, setting up repayment plans, or completing a short refinance or short sale.

Another option may be to seek housing counseling. There are many organizations, often times non-profit organizations, that assist individuals who find themselves facing a hardship because of their mortgage payment. They may be able to work with your lender on your behalf to find a solution to your situation. Often times they are able to help you reevaluate your budget and spending habits to see if there are other lifestyle changes that you can make. This would allow you to free up funds that can be used to pay your mortgage. Homeowners can also seek out credit counseling if they have unsecured debt on top of the mortgage payments. Credit counseling cannot help you lower your mortgage payments and they do not focus on your problem with the house, but they can work with you and any creditors that you may have unsecured debts with by placing you on a Debt Management plan. Debt Management can often times help you with your credit card debt, which in turn, can free up money to pay your mortgage. As a last resort, you may need to seek legal options.

So how do I get all of the things that I want while still paying all of the bills that I have? Budget. I know what your thinking. Budgets are like diets. All it means is that you have to give up on all of the things that you want and you are stuck with just “paying the bills.” It may sound bad but it is one of the easiest, and cheapest, ways to get all of the things that you want.

Creating a budget only costs a little bit of time and effort. It may seem complicated when you first start the process but it is well worth the trouble. All you have to do is write down all of the things that you spend money on. Start with all of the basic expenses that you have like housing, transportation, and groceries. The key is to write down everything. This means if you spend $1 a week on gum it should be a part of your budget. Will it take you awhile? Yes. Just keep telling yourself that in the end it will all be worth it.

Once you have put all of your expenses down on paper, write down your take home income. Are you spending more money than you make? Are you using credit cards, payday loans, or overtime to afford everything? If you are, then you know that you need to adjust your budget. Knowing what you are spending your money on will help you to cut out items that are not important. Ask yourself some simple questions. Do you have to have the gourmet coffee every morning or can you brew your own at home? You may not be able to live without cable but do you have to have 500 channels when you only watch 40 of them? Removing items that you can live without can go a long way towards freeing up extra cash. Cash that can be used to pay down debts or saved for emergencies.

The best part about budgeting is that you can plan for all of the items you want. They can become part of your budget. If you want that new video game system, put aside the same amount of money each paycheck. This will alleviate the stress of unpaid or past due bills and will allow you to enjoy the items in life that you worked so hard to get.