Keep in mind that many of these expenses are not monthly. Consequently, you should take the amount of that expense and divide by 12 months if it’s an annual total or divide by 6 if it’s a semi-annual expense.  For items like tires and brakes,school supplies & fees. divide by 24 or 36 months, depending on how often you need that repair or fee.     So to further help you in understanding the distinction, your Needs are going to come from the “constants” and “absolute necessities”

Some of these are:

• cell phone OR home phone (having both is usually a Want, not a Need)
• monthly prescriptions
• insurances: home or renters, automobile, life, and health
• taxes: property and income taxes not withheld
• child support or alimony payments not deducted from your paycheck
• childcare
• gasoline to get to and from work and daycare; repairs required to keep your car safely on the road
• laundry & clothing that fits
• future income taxes (if you typically owe every year)
• healthcare: medical and optical expenses required for you to earn an income
• school expenses like supplies and mandatory field trips
• license plates, and personal grooming like haircuts, shampoos and soaps. 

Your Wants then, will come from the “other expenses” paragraph. Some of those are: ·

• (new) clothing for you and your child(ren) and shoes they’ve outgrown
• charitable contributions
• school/work lunches and eating out
• cable TV/internet
• pet care
• recreation that costs money
• additional grooming expenses like coloring/highlights, permanents, manicures/pedicures, perfume, salon hair and nail products, etc.
• vacations
• gifts for Christmas/Hanukkah, birthdays, anniversaries, graduation, etc.

About 347 thousand modifications are now “permanent” – up from 299 thousand last month – and 430 thousand trial modifications have been cancelled – up sharply from 277 thousand last month.

According to HAMP, there are 467,672 “active trials”, down from 637,353 last month. However if we add the trials started since December (5 months!), there should only be 300,000 thousand borrowers in trial programs. That means there is still a huge number of borrowers in limbo, but with all the cancellations, the number is declining.

The second graph shows the cumulative HAMP trial programs started.

Notice that the pace of new trial modifications has slowed sharply from over 150,000 in September to just over 30,000 in May (down from 47,160 in April 2010). This is the slowest pace since the program started, probably because of two factors: 1) servicers are now pre-qualifying borrowers, and 2) servicers are running out of eligible borrowers. The program continues to slow down …

Debt-to-income ratios worsen

If we look at the HAMP program stats (see page 5), the median front end DTI (debt to income) before modification was 44.8% – about the same as last month. And the back end DTI was an astounding 79.8 (down slightly from 80.2% last month).

Think about that for a second: for the median borrower, about 80% of the borrower’s income went to servicing debt. And it is almost 64% after the modification.

And that is the median – and just imagine the characteristics of the borrowers who can’t be converted!

Summary:

• A large number of trial programs were cancelled (finally). This will mean more foreclosures (or short sales) in the near future.
• A large number of borrowers are still in modification limbo. We should expect another 150 thousand cancellations pretty quickly (maybe in June).
• The program is slowing down quickly (only 30,000 new trials started in May).
• The borrowers DTI characteristics are poor – suggesting a high redefault rate over the next year or two.

View article…

If you file for bankruptcy, you run the risk of losing your money and your car to creditors.

But under a measure that just overwhelmingly passed the House of Representatives, one thing they would not be able to take is your gun.

The House this afternoon passed a bill that would change the law to allow someone going through bankruptcy proceedings to retain their rifles, shotguns, and pistols so long as they are worth less than $3,000 combined. (CBS Radio Capitol Hill correspondent Bob Fuss reports that, under the law, if you keep just one firearm, there is no such limit on its value.)

Sen. Patrick Leahy, D-VT, introduced a similar measure in the Senate yesterday. The bill passed the House 307 to 113.

The House measure was introduced by freshman Democratic Rep. John Boccieri of Ohio, who argues that “We must protect the rights guaranteed to us by our founding fathers, no matter what financial circumstances a citizen might face,” according to The Plain Dealer.

The National Rifle Association, possibly the most powerful lobbying group in Washington, endorsed the measure, saying in part, “We think it is reasonable for folks who are in financial distress to have an effective means of defending themselves.”

Many states already have carve-outs for firearms in bankruptcy proceedings.

New York Democratic Rep. Carolyn McCarthy argued on the House floor that the measure is a mistake, the Plain Dealer reports, arguing that having guns in households that are going through bankruptcy could increase the risks of suicide and violence.

ORIGINAL ARTICLE

With stock prices spiraling downward and treasury yields tanking, the market has been sending a clear message this week: The fragile economic recovery is in trouble. But just how bad is the outlook? In the aftermath of a bleak second quarter, experts are still divided about the likelihood of a double-dip recession. What’s becoming clearer with each new report, though, is that the economy–even if it doesn’t double dip–is steadily losing ground.

The economic souring is, of course, being spearheaded by a familiar cast of characters: An anemic labor market, a skeptical consumer base, a weak housing market, and a global debt crisis that threatens to overwhelm national governments, just to name a few. Further deterioration in even one of these arenas could be enough to trigger a double-dip, which is loosely defined as a period during which a recovery is interrupted by economic contraction, usually in the form of negative GDP growth.

Read More HERE.

Q: My wife wants to go back to school to complete her degree. Right now, we’re on Baby Step 2 of your plan, and we’re about 12 months away from being free of debt, except for our house. Should we work the budget to cash flow her going back to school now, or wait until we’re out of debt and have our emergency fund in place?

A: If you can find room in your budget to pay for it, and all it does is slow down the getting-out-of-debt process a little bit, then I think it’s a great idea. The main thing is that I don’t want you taking on any more debt to make it happen. You guys can see light at the end of the tunnel right now, so I don’t want you taking a big leap backward by piling on a bunch of student loans!

Education with a purpose is a fabulous thing. I’m all about school and learning, but the idea of going to college just to collect degrees is a little silly. Knowledge – not degrees – is the currency of the new millennium. The more you know, the more tools you have in your belt. That’s why I still read like a maniac. It helps me stay up to speed with things I need to know to do my job better!

Read more here

Congress created the Troubled Asset Relief Program (TARP) to, among other things, preserve homeownership and protect home values. In March 2009, the U.S. Department of the Treasury (Treasury) announced the Home Affordable Modification Program (HAMP) as its cornerstone effort to achieve these goals. This report examines (1) the extent to which HAMP servicers have treated borrowers consistently and (2) the actions that Treasury has taken to address the challenges of trial modification conversions, negative equity, redefaults, and program stability. GAO obtained information from 10 servicers that account for 71 percent of HAMP funds and spoke with Treasury, Fannie Mae, and Freddie Mac officials.

While one of Treasury’s stated goals for HAMP was to standardize the loan modification process across the servicing industry, GAO found inconsistencies in how servicers were treating borrowers under HAMP that could lead to inequitable treatment of similarly situated borrowers. First, because Treasury did not issue guidelines for soliciting borrowers for HAMP until a year after announcing the program, servicers notified borrowers about HAMP anywhere from 31 days to more than 60 days after a delinquency. Many borrowers also complained that they did not receive timely responses to their HAMP applications and had difficulty obtaining information about the program. Treasury has recently issued guidelines on borrower communications, and plans to monitor compliance with the guidelines. Second, Treasury has emphasized the importance of reaching borrowers before they are delinquent but has not issued guidelines for determining when borrowers are in imminent danger of default. As a result, the 10 servicers that GAO contacted reported 7 different sets of criteria for determining imminent default. Third, while Treasury required servicers to have internal quality assurance procedures to ensure compliance with HAMP requirements, Treasury did not specify how loan files should be sampled for review or what the reviews should contain. As a result, some servicers did not review trial modifications or HAMP denials as part of their quality assurance procedures. Fourth, Treasury has not specified which HAMP complaints should be tracked, and several servicers track only certain types of complaints. Fifth, Treasury has not clearly informed borrowers that the HOPE Hotline can be used to raise concerns about servicers’ handling of HAMP loan modifications and to challenge potentially incorrect denials, likely limiting the number of borrowers who have used the hotline for these purposes. Finally, Treasury does not have clear consequences for servicers that do not comply with program requirements, potentially leading to inconsistencies in how instances of noncompliance are handled.

Read More Here

WASHINGTON — The economic recovery gained strength on the biggest rise in construction spending in nearly a decade and the 10th-straight month of expansion for the manufacturing sector.    Temporary government incentives fueled most of the construction spending increases in April. Industry spending rose 2.7 percent, with gains in all major sectors, the Commerce Department said Tuesday.    In a separate report Tuesday, the Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index dipped slightly in May from a nearly six-year high in April. But the 59.7 reading for May was well above the 50 level that indicates expansion.      Export orders rose last month despite the debt crisis in Europe that threatens to spread.    “The European fiscal crisis doesn’t appear to have harmed the prospects of U.S. manufacturers, at least not yet,” wrote Paul Ashworth, senior U.S. economist with Capital Economics.    The news was welcomed on Wall Street. Stocks erased early losses after the two reports signaled a lift in the economic recovery. The Dow Jones industrial average rose about 40 points in midday trading after sliding in early trading.    Construction spending was boosted by a homebuyer tax credit, which helped residential construction surge 4.4 percent in April. The tax credit expired at the end of April.      Government spending also rose on the strength of federal support. The 2.4 percent increase was aided by the economic stimulus program that Congress passed in February 2009. State and local spending jumped 2.3 percent, and federal spending rose 2.9 percent.        The other major sector, nonresidential construction, climbed 1.7 percent. That marked the first advance in   this category since March 2009. The strength in April came from gains in private sector work on communications projects and power-generation facilities. Construction of office buildings and the category that includes shopping centers fell in April.      Commercial building projects have suffered in the weak economy through rising loan defaults and tighter credit. That has made it harder for developers to get financing.    Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the   spike from the homebuyer tax credit likely is to fade now that it has expired.    He discounted the unexpected rise in nonresidential activity and said it could possibly be revised away next month.    “These numbers are huge   ly unreliable … and we expect a downward revision next month,” he said.    Homebuilders have expressed optimism that construction will keep improving even with the expiration of the homebuyer tax credits.    Luxury homebuilder Toll   Brothers Inc. reported last week that it had a narrower loss in its latest quarter and had seen a surge in new home orders. The company said the strength in orders was holding up in May even though the homebuyer tax credits had come to an end.

Read more Here

Then the U.S. Department of Housing and Urban Development, which administers FHA programs, takes ownership of the property. The property becomes a HUD home.

Because HUD is not in the business of owning homes, FHA developed, in November 2007, an incentive program that allows a qualified buyer to purchase a HUD-owned property for only $100 down.

Standard FHA-insured loans require a minimum of 3.5 percent down payment, and conventional programs require at least 5 percent. However, if you are willing to purchase a HUD home, you can do so with as little as $100 down.

This is a government program of course, meaning some strings are attached, as well as some other points to keep in mind when considering this option.

FHA was formed in 1934 to help people living in the Depression era buy a home. One of the primary goals of this organization has consistently been to make homeownership available to working middle class America.

Read more HERE

Offers of free credit reports and scores often aren’t so.

In early April, the Federal Trade Commission cracked down on websites that offered people “free” credit reports and scores that were actually tied to the purchase of credit-monitoring services.

In some cases, people requested credit reports and unknowingly signed up for paid monthly memberships.

But, by law, there is a way to get a truly free credit report. AnnualCreditReport.com offers one free credit report annually from each of the three credit-reporting companies—Experian, Equifax and TransUnion.

If companies tout offers of free FICO scores, you can count on some strings. A FICO score, which most lenders use to assess your creditworthiness, typically costs $15.95 at myFICO.com. You also can buy it on the TransUnion and Equifax sites.

There are cheaper ways to see where your credit stands, however. Credit-reporting companies have their own credit scores, based on proprietary formulas. You can buy these credit scores for less than $10 each at AnnualCreditReport.com.

Keep in mind that these aren’t FICO scores, but they can give you a general idea of what credit tier you’re in.

There also are a plethora of free credit-score estimators online, which give you a credit score that typically is in the range of your FICO score. Among them: CreditKarma.com and Quizzle.com.

Read the original article here