Fee-Only Financial Planning Advice

How Not to Pay for a House

Jul 11 2008

Many homeowners struggling to keep up with mortgage payments are probably using their credit cards to make ends meet. Now, apparently, people who can’t pay their mortgages have a new alternative: they can charge their monthly mortgage payments to a credit card directly. I wish I were making this up, but I’m not.

Paul Jackson at housingwire.com has noted various firms that let people make mortgage payments with plastic. Last year, American Express, which should know better, began piloting a charge-your-mortgage-payment service in collaboration with two mortgage lenders that are (surprise!) now down for the count. Actually, that’s not quite …

Frozen HELOCs

Jul 08 2008

It wasn’t that long ago that mortgage lenders were eager to extend credit lines to anyone with a pulse and a property title. Alas, the industry’s mood has turned with the swooning of housing prices: frugal caution has displaced wild abandon. Many homeowners, unaware that their lines of credit could be curtailed summarily, have been unpleasantly surprised.

Countrywide Financial, infamous for its subprime loan exposure, led the way by freezing over 100,000 home equity lines of credit (HELOCs); in many cases, the borrowers were not delinquent, but their levels of home equity had dropped due to price declines. Countrywide’s new …

Life Insurance 101 – Part 1: Why Do I Need Life Insurance?

Jul 01 2008

Everyone has heard of life insurance and most people have some; it’s not an exotic concept. Yet for the average person, buying life insurance means signing the most complex contract you’ll ever enter into. This will be the first of a series of short primers on life insurance: why people need it, how it works, how much to buy, what kind to buy.

One of my favorite graphics is this one, which originally appeared in the August 2006 National Geographic. It illustrates a fundamental fact: although we don’t know when we will die, we each have a 100% probability …

Some Days You Get the Bear, and Some Days the Bear Gets You

Jun 28 2008

Wall Street is licking its wounds this weekend, no doubt, after being pretty badly clawed by what is almost certainly a bear market. In the coming days you’ll see all sorts of articles offering you free advice, e.g. identifying “Bear Market Stocks You Should Buy Now,” providing lists of the mutual funds into which you should put all your money, and so forth. What should you do?

First of all, if I may borrow a phrase from the Hitchiker’s Guide to the Galaxy, “Don’t panic.” If you’re an investor, you should already have expected that the markets could drop, because …

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