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30 Year Fixed Hovers around 5%

If you don’t currently own your the place you live in you may be missing out on one of the greatest opportunities in your life. Most of us are well aware that it is a buyers market and that homes are being sold dirt cheap. The other opportunity is the incredibly low prices on 30 year fixed mortgages. The last time they were even close was March of 2004 at 5.45%. If you look at the charts since 1971 this has rarely happenned and could truly be a once in a lifetime opportunity to have a low monthly payment on a loan. Even if you already have a home loan your payback period to refinance could be less than 2 years. The reason for that is you typically have to pay some fees to refinance your home. Let’s say you save $100 a month in mortgage payments by refinancing, but the fee is $2,400. Even with the lower payment it will take you 2 years to make up for the difference. If you plan on staying in your current home for more than 2 years it should certainly be considered. Over the next 30 years you would save $36,000.

$100 Homes

Last night 20/20 featured an interesting segment on homes in foreclosure. They interviewed some urban pioneers in Michigan who are rebuilding an entire neighborhood one house at a time. The homes sold for $100-$500. They were in terrible shape. Most of them were either burned and partially destroyed. While it will probably take 10’s of thousands to repair them and the area is awful the pioneers were doing something very interesting. They were building a community. Instead of trying to go it alone they found other people that wanted to renovate this area. One by one they began attracting friends and family to come join them in their quest to rebuild this area.

I have no doubt that in ten years this will be some cool, hip part of Detroit that everyone wants to visit. An interesting example of creativity during a tough patch in our economy.

VA or Military Home Loans

The LA Times recently featured a story on VA Loan Benefits. For military members coming home and looking to purchase a home there are some tremendous benefits. Without putting up any of their own money veterans can borrow up to 417k with a GI loan. The limits increase in other areas such as California and Colorado where home prices are higher than the rest of the nation. There are some pretty specific items you need in order to qualify

You Are Eligible For A VA Home Loan If:

  • You have had 90 days or more of active duty service during wartime
  • You have had 181 days or more of active duty service during peacetime
  • You were discharged for circumstances that were not dishonorable
  • You are currently active duty personnel and you meet the above service requirements
  • You are the surviving spouse of a Veteran who died during service or because of service-related injuries and you have not remarried.

You will also need to show work history and ability to make payments for the loan you are applying for. Lastly, there are three other reasons these loans are good for veterans.

No PMI Insurance is required.

VA Loans require no money down and you will see no penalty rates

VA Loans have lower rates than conventional loans.

Given the current economic environment this is a great option for those who have dutifully served our country.

Mentally Tough

After reading about the Navy Seals in Newsweek a week ago, I learned a little bit more from the DVD released from the History Channel called the Brain. What was interesting was the segment about how the Navy was actually able to increase the pass rate of Navy Seals by employing some new mental toughness techniques. Prior to the new techniques the pass rate was 25%. After the change the pass rate climbed as high as 33%.

They found that in dealing with fear and stressful situations there are two important parts of the brain. The amigdala and the frontal lobes. The amigdala is the primal part that process information quickly and starts immediately getting other parts of the body involved. The frontal lobes involve higher reasoning, but take longer to use. Essentially, when seals in training are confronted with a situation in the first impulse is for the amigdala to take over, but in order to succeed they need to use the other parts of their brain to execute their given task.

They outlined 4 steps used to create mental toughness and help trainees succeed. I think you will find that you can use these same techniques to help you achieve other goals for yourself. Basically, what they found is that the brain is very complex and lots of different signals are traveling all over the place. By using these techniques the recruits were better able to accomplish their goals.

1. Have a clear goal – It seems kind of obvious, but what the more successful trainees did was take it a step further and break down their large picture goals into very small and specific goals. For example, one former seal talked about his goal in the morning was to make it to breakfast and then his goal was to make it to lunch.

2. Mental Rehearsal – The candidates were instructed to rehearse in their minds the steps they needed to take over and over again.

3. Self Talk – I’ve never recorded this for myself, but apparently you can say like 300+ words a minute to yourself. This has a profound impact on your minds ability to reason and solve problems.

4. Mood regulation – This is the ability to quiet some of those hormones and other chemicals that start to go running around. They found one of the best techniques was to use controlled breathing. Slowly exhaling could help reverse these trends.

Break up with Your Money

By Dr. Bonnie Eaker Weil

As we face an economic downturn unlike most of us have ever seen, what I call “breaking up” with your money can be an important step for your financial well-being, for your relationship, and for your sanity. We never know what the future may hold – things may start to get a lot better, or they may get worse – but creating healthy relationships with your finances and budget is something that will pay off no matter what type of financial situation we face as a nation or you face as an individual or couple.

The first step is to realize the areas in your relationship where money has “intruded” to create what i call a triangle. I discuss these areas in more detail in my book, Financial Infidelity, but here are some possible triangles, and how you can break up these patterns!

1. Family/Money/Relationship: Family legacies of money behaviors are not always contained in our subconscious minds – they can be very real! Demands of extended family members for financial support can be one way in which money can encroach and put a strain on a couples finances AND on their relationship.
2. Children/Money/Relationship: Nearly 70% of couples experience relationship stress after having kids. When a couple becomes contentious over spending on their children, the couple’s relationship can suffer – as can the family’s relationship.
3. Spending (or saving)/Money/Relationship: This can be a case of “opposites attract” in the extreme: the relationship then becomes at risk for damaging power struggles, sneaky “pay back,” and other deceit.

Hiding or denying the role money has in your life and in your relationship – as in any of the scenarios above, or other scenarios – has a toxic affect on a relationship. These types of “triangle” behaviors negatively influences your relationship with your partner. You may not think of it as cheating, but if you continue in this type of lop-sided relationship, it will take a toll. Attachment to your money can often ruin chances for you and your partner to build an intimate relationship.

Learning to prioritize the role of money in your relationship is an important step toward a healthy dynamic between your, your partner, and your money. I’ve come up with several ways to do this – here is one such exercise:

Withdrawals and Deposits:

Day 1: pretend you have suddenly been forced into bankruptcy. You are poor and have nothing – no money, no investments. Take your negative fantasies into the extreme – imagine yourself selling everything you have, being free of all your material goods.

Day 2: Visualize yourself with plenty of money, and all that entails. You are comfortable and able to do the things that are truly important to you.

Day 3 – and forever after: be consciously grateful. Each day, count the things you are grateful for.

Dr. Bonnie Eaker Weil has been an internationally acclaimed relationship therapist for thirty years. New York magazine named her one of the city’s top therapists and Psychology Today named her one of America’s best therapists. Her most recent book, Financial Infidelity, is available on Amazon.