Latest responses to “December 2008 - Net Worth Update and Personal Finance Status” Copyright 2012, MoneyBlueBook.com 409640 2009-02-22T20:46:51-08:00 FortuneCat Hello How to Improve Financial Situation: When it comes to bad experiences, it's a waste of a lesson and you may have to repeat it if you don't take steps to address it. You were out of work for only 7 months and it resulted in bad credit. Before you buy the condo, plan for being out of work for 1.50 year with savings in bond, CDs, and savings. So the next time you're out of work, you take 3 months to go on vacation right away. After that come back refreshed and ready to do work you really love. Money for a home should be saved the same way as money for days without work. Checkout Vanguard.com for a mixture of different risk level bonds, look around for CDs, and put your savings in GeInterestPlus.com and other bank savings account. Spread your money around and track it with Yodlee.com. - FortuneCat 409580 2009-02-21T15:29:43-08:00 How to Improve Financial Situation Hello perhaps you can lend me some assistance. I have been out of work for 7 months, I have gone through all of my savings and my credit had plummetted due to late payments? I have a few positive prospects for a job and I may have one by March 2. In any event once I begin working again I need to seriously put money back into my savings. I want to purchase a condo by 2011, b/c as I know it those late payments will no longer count. What kind of account do you recommend I save into? I do not want access too it only when I reach the goal of what I am saving for. Any advice is appreciated. 409600 2009-01-07T05:17:10-08:00 Raymond Elizabeth, I think the new collective phrase in 2009 for home buyers like ourselves is "price gouge". Whatever the home seller is asking for his or her house/condo- demand much, much less. 20% lower sounds good, but you're right, you very well may have been able to demand a lower home selling price and still elicited an agreement. I personally don't believe in the perfect "I simply must have this or I'll die" home, particularly in this market. There are plenty of dream homes out there and the flexible buyer will be able to snag a great steal in this housing market. I'll definitely share my home buying experience as it unfolds in the coming year or two. But looking at prices these days...I'm still very wary. Sort of debating whether I should hold off on the house for another year or two and buy a nice 52 inch plasma TV as a consolation instead. heh... 409570 2009-01-07T01:19:59-08:00 elizabeth Here's my update, Raymond. I made an offer 20% lower than the asking price which the seller accepted. Maybe I should have held out and got a steal, but I didn't want to risk it. What FortuneCat said is important to me, "Buy a great home....in a great location....buy the home you LOVE." And I did exactly that. Here's another perspective that influenced my decision: The "Red Shoes" Experience Women will relate to this. Say, you need a new pair of red shoes. You go to the mall. At the first shoe store, you find a fabulous pair of red shoes. You try them on. They fit perfectly. They are glamorous. Priced right, too. Do you buy them? Of course not! You go to every other store in the mall trying on red shoes until you are ready to drop from exhaustion. Then you return to the first store and buy those red shoes. Do not shop for a home this way. When you find the perfect home, buy it. -- By Elizabeth Weintraub, About.com (Tips for first-time home buyers.) I also got a great rate from my lender, just under 5%. Will mortgage rates dip lower? Maybe, but a 30 year loan at 4.7 isn't anything to sneeze at. I look forward to hearing about your update when you find your home and decide to buy! After this experience, maybe I will have some advice for you. : ) New year; new house! Here's to 2009! 409620 2008-12-24T20:19:33-08:00 FortuneCat I read your site once in a while and it looks like you've come a long way. As for your housing question, skip the condo and buy a family home that you LOVE in a great location. You can rent out rooms when you're still single while your income is still low. When you get married your income will be higher and your spouse maybe able to help out also. Buy the home you love and you don't have to loose money on the sales cost because you have to upgrade later. Finally don't think of your house as an investment that's secondary. It's a home. Pay it off early and it'll act like an interest free bond that you pay to yourself. Additionally, you don't have to worry about it going down in value 20 years from now. Buy a great home. 409520 2008-12-22T17:40:57-08:00 Raymond Elizabeth, I think websites like Zillow and Trulia are great reference points to get a general feel of how local housing markets are doing. However, remember, they are just generalized valuations and not a true reflection of what people are actually willing to pay for those homes. They simply do not take into consideration selling desperation factors or the huge housing inventory supply that currently exists into account. I suspect true valuations are substantially lower. After scanning those sites, one thing is clear - housing prices are dropping and continue to plummet. Even depressed housing markets, especially in places like LA, Miami, and Las Vegas remain grossly overinflated and overvalued despite their price drops of 30% or more. Housing pessimists are predicting that it will take 2-4 years for additional prices to recover and that housing values will continue to go down in the meantime. Optimists (most notably the National Association of Realtors, or NAR) have been droning on about how housing prices will recover for the last 2 years, despite continued facts to the contrary. Even as I write, NAR is still touting how a housing recovery is near. In my opinion, housing optimists have no credibility in their projections so I'm inclined to head the warnings of bearish real estate pundits. More likely than not, the housing list prices you'll encounter at the moment remain over priced. 409630 2008-12-21T09:40:05-08:00 elizabeth Raymond, Thank you for your response. The localized aspect is what I'm grappling with now, so I especially appreciate your comments regarding that consideration. The asking price on the house I'm considering seems to be overly inflated. Do you find websites like Zillow and Trulia to be useful? 409530 2008-12-20T17:03:20-08:00 Raymond Jim777, Can you clarify on how I am setting myself up for identity theft or identity fraud? It's not like I'm providing my credit card numbers or social security number information online for all to see. I don't mind if the IRS is watching. I report all taxable income and pay my taxes. I engage in legal tax avoidance (by taking steps to reduce my taxable income in a legal way) but I refrain from actions that may be construed as illegal tax evasion. 409560 2008-12-20T15:15:46-08:00 Jim777 I'm not being a jerk but you are CRAZY to post your financial info on the internet like that. You are making yourself a target for Identity Theft and other scams. Not to mention, the IRS is watching as well. You should immediately take that info off this site. No kidding. 409540 2008-12-20T14:32:59-08:00 Raymond Elizabeth, The thing about real estate and housing is that it's very much localized. While national factors like interest rates, economy, and overall sentiment may and will sway prices, oftentimes, housing prices are driven by local regional factors like job availability and location. Thus it's hard for me to describe what exactly I mean by "exceedingly great discount"...but something much lower than the asking price sounds about right. After all, I believe national consumer real estate prices will continue to plummet through 2009 and likely 2010. Commercial real estate prices are just beginning their downturn as well. Honestly...I doubt your dream house will be snagged away anytime soon. We are in the midst of a massive buyer's market and the housing inventory continues to grow as some stubborn sellers refuse to drop their asking prices. I have many friends who currently are homeowners who have given up their momentary wish to sell their homes. They want to wait at least until the summer or sometime in 2009 or 2010 to sell. Unfortunately for them, many stubborn sellers are in similar predicaments and when they all try to sell again, they will find that the huge housing supply glut, and strong economic recessionary forces as well as unemployment rates will keep prices high and potential buyers away. Eventually, sellers will need to drop their prices substantially. Although prices have already plummeted, I'm personally waiting for another 20-30% drop in my area of Washington DC/Maryland and Virginia. That's extremely bearish, but I don't mind waiting. Even a 10-20% further drop with huge concessions may be acceptable. Thus as buyers, we must remember that sellers are desperate and essentially begging for our bids. As partakers of this capitalist system, we must allow these desperate forces to compel them to drop prices to the absolute bottom before jumping in. There are so many housing opportunities available...don't feel like you need to settle. I encourage as much price gouging as possible....ask for concessions, better appliances, and demand compensated closing costs. If the seller refuses, simply move on. They need you much more than you need them in this market.