Freeze credit cards and ATM cards in a glass of water in your refrigerator freezer. Get spending on a cash basis and make notes/keep receipts on all purchases to help raise your awareness of where your money is going, day in and day out.
Take some financial pictures of yourself. The big picture is your net worth, listing the things you own versus the things you owe. But don't stop there, Take a close-up picture of your net worth, that is your cash-flow, which is money moving in and out of your life on a monthly basis. It is a list of all income received in a month and also a list of all expenses during the same month. The difference in the two amounts equals your cash flow, be it positive (more income than expenses), or be it negative (more expenses than income), or be it zero (monthly income and expenses are equal). The close-up picture will help in prioritizing monthly spending. The cash-flow will also help identify spending that may be hurtful to getting out of debt. Try to get as much extra cash going to debt pay-down as possible.
Create a written spending-plan and implement it with the next paycheck or the first of the month, whichever comes first. The cash-flow exercise is the basis for the spending-plan; all the leg-work is done. The monthly spending-plans then become your financial roadmap. The key is to follow it closely, because within that spending plan will be the Christmas debt reduction and, eventually overall debt elimination.
Look for ways to get a better value for your dollar. It may mean doing things for yourself that you may have paid others to do for you, such as lawn care, car washes, laundry, and so forth. Comparison shopping is another way to save money and get more value. Coupons and rebates add value to your dollar, especially at the grocery store where the average American family spends 30 cents of every take-home dollar.
Make it a family affair. Everyone can contribute to energy savings, avoiding food waste, clipping coupons and watching out for sales on things regularly purchased. Everyone can become a comparison shopper and look for better values. An over-spender is not just someone who spends more than they earn, an over-spender is also someone who pays too much for things and the latter group is the majority.
Add to your income at the same time you are spending smarter. This can be done by taking part-time employment, selling things on the internet with eBay, for instance, perhaps generating additional income from a hobby, craft, music or language instruction, and tutoring, to mention a few.
Get some visual reminders around your home and office about improving spending. If ATM and some credit cards must be unfrozen, place a note on your refrigerator.
1. Create a list to take shopping. Put anything you want on the list, but don't add to the list once you get to the store. Using a list will help plan for your needs in advance, so take advantage of sale prices and avoid impulse purchases. "Go alone after a meal". If you go shopping hungry or with another, you're shopping for more than one appetite and the result is always increased spending.
2. Watch for coupons in your mail box and flyers distributed at the stores, watch for store ads in the newspapers and coupons on Sundays. Check for sale prices on the items you regularly purchase. Compare prices with other stores, especially those you don't normally visit. Pay special attention to the days of the week the sale prices are in effect. For example some stores have no sale prices in effect on Mondays, traditionally a busy shopping day. Carefully plan purchases, noting on the list which items are sale priced and items where a coupon can be used.
3. Spend cash. Take time to get cash before going to the store. Nothing impacts our mind like taking cash from our wallet or purse. Many people who use credit cards rarely know how much was actually spent - until the statement comes. Many people who write checks simply do not take the time to calculate the balance and have no idea what is left over. Paying cash causes us to think ahead.
4. Take advantage of coupons and rebates, they do add up. Shop at stores that double coupons and take the time to watch the papers for grocery coupons. Look for items on the shelf which also have coupons included inside the packages, called a double play by couponers.
5. Always shop by the unit price at the stores. In most states it's the law that retailers post the unit cost on the shelves. It used to be the larger the pack the better the price, but not always so these days. For example a 50 cent coupon, doubled on any size of soap detergent could make the smallest size the most economical in terms of least cash spent.
6. Avoid buying plastic bags for food storage or garbage disposal. The stores give plastic bags away free and there are plastic bags available in the produce and meat sections. Separately bag each item and save them for reuse. When asked if you want either a paper or plastic bags, ask for paper inside of a plastic bag and you will then have an ample supply of ready-made garbage bags.
7. Cleaning aids, cleansers etc. are very costly and prices vary greatly with the brands. Some companies market a cleanser (and now specialty wipes - what a waste) for virtually every type of household project. The best cleanser in the kitchen, aside from powder is ammonia. No need to buy a brand name, ammonia is ammonia, if you want it soapy, then add some detergent. Another valueless item is dish soap promoted to be more gentle to hands or cuts grease better. If your hands are that sensitive, use the longer lasting rubber gloves and save money on detergent by using generic brands. Hot water and any detergent will cut grease.
8. Plan meals in advance. Keep in mind wise use of leftovers or freezing for later use when purchasing meats, etc. and making pasta dishes for example. Consider buying meat items you use regularly in bigger quantity, freezing for later use the portions not needed the week you buy them. This can save you up to 20 percent.
9. Avoid prepackaged items. Cereals, breads, desserts, juices, beverages etc., mixed and prepared at home are always a better value than prepackaged items. The same is true for pet foods and many experts agree dry pet food mixed with water is better than canned food.
10. Be cautious about adding non-food items to the grocery list. These include health and beauty items, paper and plastics, utensils, brooms, brushes, film, etc. These items have the highest profit margin for most grocers, which is exactly why they are prominently displayed in the stores. Usually a better value can be obtained at discount drug stores.
11. When shopping stick to the list and plan in advance all purchases to take full advantage of sale items and 2 for 1 deals (if the price isn't inflated to compensate). When possible shop the outside walls and stay out of the aisles. Most food stores situate the four basics (produce, meats, dairy and breads) on the walls. They most often place all the cookies, cereals, beverages, canned goods and the nice-to-haves on the aisles.
12. Finally, check the checker. Note the prices as you select items and then make sure the same price is posted at the check-out. Check the register tape again after leaving the store, often unintentional mistakes are uncovered, especially with large purchases. Many times a sale price is listed in the store, but not reflected at the check-out. Also, the shorter the time spent in the store, the less money spent.
Mortgage bonds advanced 34bp following larger than expected weekly initial jobless claims. With layoffs in the service and construction industry it was no surprise that reports jumped by 38,000 to 407,000 reaching a two year high. The more widely watched four-week moving average for initial jobless claims increased by 15,750 to 374,500, also a two year high reading. The consensus estimate was for 365,000 new claims. This data suggests a weakening trend in the labor market and may also signal a weak monthly Jobs Report for tomorrow.
Bonds gave up some of their gains as the day wore on following a better than anticipated ISM Services Index for March. The Index measures activity in the service sector of the economy and although the reading came in below 50% at 49.6% indicating a slight economic contraction, analysts were expecting a lower level of 48.5% or worse. The news allowed the major stock indexes to pick up off of their lows while pushing bond prices off of their intraday high prices. The Dow Jones Industrial Average edged 20 points higher to close at 12,626; the NASDAQ Composite Index picked up a point to close at 2,363; and the broader S&P 500 Index also added a point to close at 1,369.
What is this telling us? If you're prospecting first time buyers, how do you profit on a market like this?
I have included a couple of quotes that will give you an idea of today's event.
"The 12-month number for the CPI is running at a very high level ... and the components of that (rise) are worrisome," Fisher said, referring to the U.S. Consumer Price Index.
"There are some risks that we're seeking to manage but it may be that economic growth will be even slower than we envision," he added in regards to the current economic environment. It was interesting to see the markets reaction prior to Fisher's comment... Currently the Mortgage Bonds dropped to lows for the day.
If you buy, sell or refinance real estate I just want to tell you that, now is the time to join efforts, we ought to be strategic in order to come up with financial solutions to secure deals ahead of potential changes in the market place. Real estate veterans would agree with me when I say that lately prices have been very volatile in the mortgage market. Do you agree?
Today is Wednesday, the 20th of February 2008, and there are several economic events due, nevertheless I will focus on the ones that (according to my personal opinion) have greater influence on mortgage rates.
First of all, last month's Consumer Price Index (CPI) was higher than expected with the overall rate of 0.4%, and the Core rate amassing up to 0.3% (excluding the increase in prices of food and energy) being the biggest monthly increase since June, 2006.
If we analyze the annual CPI numbers, we'll see that 2.5 % is considerably above the Fed's level of tolerance. Many experts were 'right on the money' when they predicted that inflation was going to be one of the Federal Reserve Commetee's biggest concerns for 2008.
Second, the minutes of the two-day meeting that concluded on Jan. 30 are now available. On their statement, "The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully," the Fed said. While Fed policymakers are still discussing what further steps might be needed due to growing risks to the U.S. economy, the markets are trying to find hints that will indicate if more fed rate cuts are on the way.
I will stop right here, because I just got a notification that mortgage bonds finished the day on another wild roller coaster ride by first plunging -34bp lower on a CPI report showing higher than forecast consumer inflation and then reversing course and soar 97bp higher intraday for a net change of +56bp in reaction to negative economic and credit crunch data.
Is a Fed rate cut really good news for mortgage rates? The facts may be surprising. The Fed can only control the Discount Rate and the Fed Funds Rate. This is very different from mortgage rates. A mortgage rate can be in effect for 30-years while a rate set by the Fed can change from one day to another. On the graph see how the interest rate on the 30-Year Fixed FNMA have been on the rise since the last couple of Fed Rate Cuts. It is often said history repeats itself, right?
Today, the mortgage bonds dipped -135bp, which is the biggest dent in the last two years, as a result of worries of inflationary signs that experts have seen in the economy, especially with the weak U.S. dollar and the high commodity prices. Both the oil price and the gold have risen highly against the weak U.S. dollar. Keep in mind that high commodities prices often lead to inflation, which is hostile towards mortgage bonds.
I usually don't do weekly reports, however as I was getting organized after a busy week, I've noticed some things that I'll like to share.
On February 13, the highlight was last month's Retail Sales report with an unexpected +0.3% The surprise was due to the fact that traders were almost counting on a -0.3%. Excluding the automobile sales, we get 0.3% that also turned out to be better than the expected 0.2%. It just makes sense that February could have been a slow month, because as we go through changes in the economy we become more cautious about spending and some times before making additional purchase decisions we wait for income tax refunds to pay off credit card debt incurred during the holidays.
On Valentine's day a report showed 348,000 Jobless Claims (Initial) for February 9, 2008, which in spite of the loss of employment in different sectors was below expectations of 360,000.
Right after the most romantic day of the year here we started with the often volatile NY Empire State index, which is a regional manufacturing report showing a surprise reading of -11.7 versus forecasts for a positive reading of 7. Please not that any negative reading suggests contraction in the sector.
Another report, the University of Michigan's February consumer sentiment index, showed a bigger-than-forecast dip to 69.6 from 78.4 in the previous month. Economists thought it would fall to 76.5.
A third report showed a slight tick up in industrial production and flat capacity utilization in January. The experts are saying,"the combination of rising utilization and a falling unemployment rate pose issues for the Fed's outlook for inflation pressures,"
The last, but not least Consumer Sentiment Index (UoM) report for the month of Feb dropped at 69.6. It is necessary to notice this mid-February level, because represents the lowest since February 1992 while the expectations were 76.5.
The main feature was the investors'reaction after the Congressional testimony of the Federal Reserve Chairman Ben Bernanke, who underlined that the economic conditions are likely to get worse before they get better.
What's all this?
Many families see and feel inflation on the rise as housing problems, coupled with higher energy and food prices are tamping consumers' outlook, according to results from recent surveys. I hope you're getting used to this roller coaster ride, because volatility in the market place has been incredible, especially with mortgage bonds trading sharply lower because of the fear of inflation. While the general public still believes that mortgage rates will continue to go down thanks to the Fed cuts, we need to tell them that interest rates change sometimes hourly. I don't know if you have online access to rate sheets, but I have been getting re-prices for the worse on a daily basis for the past couple of weeks.
I've read mixed comments about the highly anticipated "rebate." For example, on a January 31, 2008 press release, the Financial Planning Association advice consumers to be carefull how they will spend their rebate checks.
One of the strongest observations from the personal finance perspective is that "spending the rebate may not be in the best interest of many Americans. Not setting up a household budget is how many Americans got into financial trouble in the first place." according to Mark Johannessen, CFP®, president of the Financial Planning Association® (FPA®)
The FPA made a point if we consider that the national savings rate is minus 1/2 percent, bankruptcies are increasing, and the average American household credit card debt is $8,400.
"The economic stimulus carries the wrong message, because it is anti-savings and anti debt-reduction," said Johannessen.
In a few weeks the checks will be in the mail, and Johannessen is urging people to carefully consider using the money to pay down their credit card debt or add it to their savings for an emergency fund or retirement.
Another item to consider on this package is HR 5140, which will increased home loan limits in metropolitan areas. This means that HUD will have 30 days or less to come up with the median prices for areas throughout the country, which may then cause an increase to the conforming limit in those markets. Ironically enough, the NAR just publish this data today under the title "Metropolitan Area Existing-Home Prices and State Existing-Home Sales."
The existing dynamics between the financial market, and the solutions that mortgage professionals cater to borrowers to help them navigate on this volatile environment, is one of the reasons I love my career.
Every day I look forward to see how economic reports influence the traders' investment decisions in the mortate bond and stock market...
Last Friday's Initial Jobless Claims were reported at 356,000, that was above expectations of 340,000. It is important to notice that in the review of the previous week claims increased from 375,000 to 378,000.
The most significant average movement was on the last four weeks where Initial Claims increased to 335,000, following an increment in unemployment claims from 75,000 to 2.78 millions, representing the highest level recorded since October 2005.
David's mortgage update:
Mortgage bonds had their monthly coupon rollover after the close of trading. How did that affect homeloan pricing? The effect of this rollover was minus 19 basis points adjustment.
The big day is almost here! President George W.Bush is set to sign the Economic Stimulus Plan on Wednesday. Here is the nitty-gritty of the Increased Loan Limits on Bill HR 5140.
One of my trusted sources tells me that we'll be able to finance residential loans that were considered "Jumbo loans" (real estate financing above the industry-standard definition of conventional conforming loan limits) which is great news. But the question is, will this reform help the majority of homeowners? In the real world, this update will work for a drastically limited number of borrowers.
It is nevertheless, good news for homeowners living in in expensive metropolitan areas such as Southern California, where median home prices now exceed the $417,000 limit. Borrowers with these programs were subject to higher interest rates due to the slightly higher risk to the lender. To qualify for lower interest rates these mortgages will be eligible if they are granted between July 2007 and Dec. 31, 2008. This bill would also allow the Federal Housing Administration to insure loans up to the same $729,750 limit.
David's mortgage update:
We're floating today due to no economic reports scheduled for release and mortgage bonds remaining unchanged.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
I've read mixed comments about the highly anticipated "rebate." For example, on a January 31, 2008 press release, the Financial Planning Association advice consumers to be carefull how they will spend their rebate checks. 
;)
;)
