“If you say you can’t, then you absolutely won’t”.
-My dad

My dad would always tell me that whenever I gave up on anything.

“Dad, I just can’t do it!”, I would often say.

It never failed that he would respond with some variation of the quote above. The first several times I heard it I was extremely annoyed, but didn’t have a good retort.

After a while those words started to sink in and I started to believe it.

Mindset is everything. Once you give up hope, you’ll never succeed. Period.

In my newsletter, I send out an email that shares the story about my Chevy Lumina (“The Lu”) and how a change a mindset will make me over $2,000,000. (You can read more about it here).

In the email, I asked my readers to share what pivotal point in their life forever changed their mindset.

Some of the responses were absolutely amazing and touching.

Then there was the one that was not.  In fact, I could tell that the person had given up hope.

When I read the email at first I was disappointed.

Here is their response:

You just want me to buy the book.

Tell me how a retired person with so little in bank from 401k can change that into millions, in a very small town , uneducated and very skeptical?
ATTITUDE IS EVERYTHING,

First a quick note…. with all the content that I put out, with all the newsletters that I do and all the videos that I record; I promise you it’s not all to sell a book.

Yes, of course I would love for you to buy a copy when it comes out, but if I did everything just to sell a book then this all would be for nothing. My passion is to help people, period.

Ironically, it wasn’t the accusation that upset me.  It was the persons mindset.

I could tell that they had given up hope.

And what is even more ironic?  How about how their closing:   “ATTITUDE IS EVERYTHING“.

For someone that signs that with each and every e-mail, it seems that they need to pay closer attention to what it really means.

• Once you have given up hope, you have failed.
• Once you truly believe that there is not better outcome for your life,  things will never improve.
• Once you make that mental shift into permanent negativity,  all is lost.

Your “ATTITUDE IS EVERYTHING”!!!

My response to this person was the following:

I want you to buy the book if you think it can help you or help someone you know. Period.

I live in a very small town (5500) and luckily time is on my side to save for retirement.

If you are retired with no additional income coming in, then you won’t be able to turn “so little” into millions. But what about your kids? What about younger people that you could influence to make sure they aren’t faced with the same dilemma.

My parents were horrible at managing money. My mom still is. She never learned the basics of personal finance and, in turn, was never able to teach me. Truth is, I’m very fortunate and blessed that I learned it when I did.

My book, my blog, my videos and my mission are to give people the tools to take care of themselves. The tools that I didn’t get.

That “attitude” is what inspires me each and every day.

Even it was too late for this person they didn’t have to be a victim. They could take this experience, take their failures, take their shortfalls and use that to encourage others.

So often times I see people that are selfish with their experiences.  If they took the time to share their story they could have a dramatic impact and truly help these people.

I am confident that with a positive attitude, their life could still be turned around.

“Do what you can where you are with what you have.”
~ Theodore Roosevelt

Avoid PMI

When we were in the process of building our dream home, we pretty well expected to go over budget.

Knowing this we tried to cut expenses as much as we could.  The one expense that we knew that we absolutely had to avoid was PMI (Private Mortgage Insurance).

Recently, I had a reader question also pertaining to PMI:

Joe A. wants to know:

I’ve had my mortgage for 2 years and want to get rid of my PMI. The lender told me that I must get a home appraisal to prove that I have at least 80% equity.

Well, I got the appraisal and then paid the loan down to 80% of my home’s value. But then the lender sent me a letter saying I need a loan-to-value that’s 75%!

Now I’m worried that I’ll pay the loan down to 75%, but they’ll just have another excuse not to remove my PMI. What should I do?

Before I tell you the best ways to get rid of PMI, let’s take a step back and make sure you know what it is.

What Is Private Mortgage Insurance (PMI)?

Private Mortgage Insurance or PMI is a product that protects a lender in case you default on a home loan and they’re forced to foreclose. It’s a downright irritating expense because it’s like having to pay for your neighbor’s health insurance each month—it doesn’t benefit you in the least.

Nonetheless, lenders typically require you to pay PMI when you borrow more than 80% of the value of a home. In other words, if your down payment is less than 20%, they have more at risk and require you to help them mitigate that risk.

Paying PMI allows you get a mortgage when you can’t come up with 20% down, but it’s also an added monthly expense. That’s why Joe and many homeowners are itching to get rid of monthly PMI payments so they can keep more money for themselves.

How Much Does Private Mortgage Insurance (PMI) Cost?

The cost of PMI varies based on various factors, like the amount and term of a mortgage. But it could be in the neighborhood of 0.5% up to 1.5% of the mortgage amount per year. For example, if you have a $150,000 mortgage, your PMI premium could cost about $65 per month.

You can check your annual mortgage escrow account statement or contact your lender to find out how much you’re paying for PMI.

5 Ways to Get Rid of Private Mortgage Insurance (PMI)

There are 5 ways to avoid or to get rid of PMI:

• Make a 20% down payment: The best way to make sure you never have to pay PMI is to avoid it altogether by paying a minimum of 20% down on your home. That means you may have to delay a home purchase while you continue saving up.

• Automatic cancellation based on your home’s original purchase price: For a conventional mortgage that you took out on or after July 29, 1999, your PMI must be canceled automatically once you have 22% equity in your home.Once you’ve paid your mortgage balance down to 78% of the original value of your property, federal law requires a lender to cancel your PMI. However, this rule only applies if your mortgage payments have been current for a full year, or they’re no more than 60 days late within the past 2 years, and you have no liens on the property.Additionally the lender can require evidence that the value of your home hasn’t dipped below its original value. They may also require that you don’t have a second mortgage or a home equity line of credit.

  For a mortgage you signed before July 29, 1999, it’s up to you to contact your lender and request that they remove PMI once you reach 20% equity. Different states may have laws that affect PMI cancellation for older mortgage, so contact your lender for more information.

• Request cancellation based on your home’s original purchase price: If you pay down your mortgage balance to 80% or less of the original price—or the appraised value at the time of the sale, whichever is less—you can request that your lender remove PMI.This request doesn’t force a lender to remove it, but is subject to regulations under federal and state law. Again, they can require evidence that the value of your home isn’t lower than its original value.

•  Request cancellation based on your home’s current value: If you pay down your mortgage to 75% or less of your home’s current value (as determined by a licensed residential appraiser), you can request that your lender remove PMI.

• Midpoint termination: PMI must be cancelled when your mortgage reaches the midpoint of the term. For instance, for a 30-year loan with 360 monthly payments, the midpoint is after you make the 180th payment. This cancellation only applies if your mortgage payments are current.

So, getting back to Joe’s question, I’m guessing that the lender first gave him instructions based on number 3 above. They wanted to find out if Joe had a loan-to-value of at least 80% of the original value of his home.

Since the real estate market has declined over the past several years, it’s likely that Joe’s home value has dipped since he bought it 2 years ago. That’s probably why the lender gave him new instructions based on number 4 above, requiring that his loan balance be 75% of his current home value.

You Have Rights Under the Homeowners Protection Act

As a homeowner, Joe is covered by the PMI provisions in the federal Homeowners Protection Act of 1998. If he does pay the loan down to 75% and his lender doesn’t follow the rules for canceling his PMI, Joe can file a complaint with the Federal Trade Commission (FTC) at ftc.gov.

When you need legal representation, you want to choose the best lawyer for the job. With so many lawyers advertising on TV, the internet, and on billboards, it’s hard to figure out which one is best qualified to serve you. By asking around, doing some research, preparing questions, and meeting with potential attorneys, you can find the best fit for your needs.

When I first started in the business I was completely green on whom to refer my clients to if they needed estate planning work.   Not having any relationships with any attorneys, I relied on my colleagues for some good referrals.   The attorney that most used was one that came with a hefty price tag, but he was considered “the man” for the job.

The first clients that I referred to this attorney walked away with quite a bad experience.  While the cost was a bit higher compared to other attorneys, the clients would not have had an issue with except that they found several errors in the trust document.  My client was a retired English teacher and she took the time to read the entire trust documents.   And thank goodness she did because the errors that she found could have been costly.

I was fortunate that my clients didn’t blame me for the mishap, but I couldn’t help but feel responsible. At that point I vowed to myself that I wouldn’t refer any clients to anyone that I didn’t have a personal experience with.

Friend and Family Referrals

Traditionally, and still one of the best ways to find an qualified lawyer, is to ask for referrals from friends and family. Your friends and family will be able to give you a testimonial regarding the quality of service they have received from lawyers that they have worked with in the past. This is a starting point for narrowing down the field. Once you have a few names, you can contact those lawyers to see if they are able to handle your particular case or needs. If they can, you may set up an appointment to meet with them and further decide if they are a good match for you. If not, they might be able to refer you to a qualified lawyer who works in the area you need.

Online Searches for Qualified Attorney

The internet can be a very useful tool in narrowing down the pool of potential qualified lawyers. You can begin by searching for lawyers in your area, and by specialty. You can then search for references or negative feed back about the lawyers you select. Once you have chosen a few, as with referrals from family and friend, you can begin setting up appointments with potential lawyers.

Prepare Questions

Once you have set up appointments with a few lawyers, you will need to be prepared with some questions for them to help you select the best fit.

Remember, it is not necessary to choose a lawyer or sign any contracts at this point. You are really just taking the time to interview several to see if their qualifications match your expectations.

Straight From the Source

Curious to see what an actual attorney would say regarding the situation, I went straight to an attorney that I trust.  Adam Lawler of Adam B. Lawler Law Firm, LLC  is an attorney that I trust so I thought I would pick his brain on what he thought about finding a qualified attorney. Here’s what he had to say:

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First, get a referral from a friend, colleague, lawyer or local bar association to find a lawyer in your geographical area that practices in the legal area you need.  After you get that referral or recommendation, the best way to choose a qualified lawyer is through asking questions of the prospective lawyer.

It is imperative that you ask the lawyer many questions during the first meeting, including:

• Have you handled a matter like this before?
• What are  the anticipated costs including the attorney’s fees?
• What is the anticipated time frame for completion of the item(s)?

You should expect to have these questions answered in such a way that you can decide how/if to proceed with your particular matter.

One must remember that lawyers give legal advice, they do not make ultimate decisions for you.

******

 Listen to Your Gut

After you’ve interviewed several qualified lawyers, it’s important to listen to your instincts. The questions you asked are very important, but so is your feel for the lawyer. You may be working with this person extensively and need to feel comfortable and confident with them. Think about their responsiveness to you in terms of setting up your initial meeting, the appointment time, their promptness and availability. Take into account their abilities and experience but also their willingness to work hard for you and make you feel like an important client too.

photo credit: dno1967b

You might think that there’s no way you can possibly have had enough medical-related expenses to be able to claim a health care deduction on this year’s tax return. In order to take advantage of this opportunity, you need to have spent more than 7.5 % of your AGI (Adjusted Gross Income). And then, you can only claim the monetary amount above that figure. Many taxpayers will be surprised at just how much they spend on health care. I know with our growing family we’re always (by “we’re” I mostly mean my wife) keeping tabs on our health insurance costs.  Our family is currently all through her employers coverage, and we’ve had to change a few times in the past year.

In today’s economy,  many people’s income has remained the same, or even gone down. Unfortunately, the cost of health care keeps going up. Therefore, it is crucial to take a look at medical and dental expenses to see if you qualify for this possible deduction.

Tax Deductible Medical Expenses

In general, deductible medical expenses are ordinary costs you pay out of pocket for the health and well being of you, your spouse, and any dependents. These expenses include the following: payments for  medical services provided by physicians and other legal medical practitioners. They include the costs of equipment, supplies, and diagnostic tools needed for these purposes. All medical procedures – surgeries, visits to the doctor, tests, and therapy – that is medically necessary for recovery or improvement of health is tax deductible. Approved medical expenses include, but are not limited to, the following:

Only the medical and dental expenses you paid this year can be included, regardless of when the services were provided. Do not include medical expenses that were paid by insurance companies or other sources, whether the payments were made directly to you, to the patient, or to the provider.

Taxpayers who keep careful records of  medical and dental expenses may be able to substantially reduce federal income tax liability. Definitely take the time to review your medical costs for the year to discover whether or not you can save money by itemizing your deductions.

This information is not intended to be a substitute for specific individualized tax advice.  We suggest that you discuss your specific tax issues with a qualified tax advisor.

photo credit: Jobs with Justice

Many people use their Flexible Spending Accounts (FSAs) to help pay for medical costs and co-pays. These accounts are funded with pre-tax dollars, so contributions to the accounts represent a tax deduction. Using pre-tax dollars to make health care purchases is one way that you can make the most of your money. This is especially helpful, since items like bandages, over the counter (OTC) medications, crutches and other items not usually covered by health insurance can be purchase using your FSA. The convenience factor was even expanded by the fact that many FSAs have debit cards attached to them.

But some of the convenience goes away this year. January 1, 2011 marked the beginning of new rules governing OTC medications and debit card use with the FSA. The new rules don’t change what’s eligible with a FSA, but they do change whether or not you will actually be able to pay for it. Here’s a recap of the FSA changes for 2011.

Big FSA Change: Prescriptions for OTC Medications

The biggest change to watch out for is that you can no longer use FSA money to pay for over the counter medications unless you have a prescription for them. This means that if you want Ibuprofen, cough syrup, allergy medicine and antacids to be eligible for FSA money, you will need to call your doctor and ask for a prescription. In most cases, it is likely that your doctor’s office will simply call in the prescription for you, but it still creates an extra step that you (and your doctor) will have to complete.

The good news is that non-medicine health care supplies, like bandages, condoms, and crutches, as well as non-prescription insulin, can still be bought using FSA money without a prescription.

New Flexible Spending Account Debit Card Rules

The other major FSA change to watch out for deals with where you can use a FSA debit card to pay for prescriptions. You can still use your FSA debit card to make non-drug purchases without much trouble. However, if you are purchasing medications — prescription and non-prescription — you cannot use your FSA debit card unless you are doing so at a business that gets 90% of gross receipts from medicine sales. This means that if you get your medications at a club store, grocery store, or some sort of superstore, chances are that you will have to shell out using after-tax dollars and then apply for reimbursement from your FSA.

You have until January 15, 2011 to make medication purchases FSA debit card wherever you want, and then you need to double check how you use your debit card to purchase drugs.

FSA Penalties

You want to make sure you do it right, since the IRS will be keeping tabs. The penalty for disobeying the new FSA rules is to have the ineligible amount that you paid added to your gross income. On top of that, you might end up with a penalty amounting to 20% of the offending purchase. Realize, too, that the new rules apply as of January 1, 2011 — no matter if you have extra time to use up the balance in your account. Some plans will give you an extra couple of months in the new year to use your FSA money; even if this is the case, all 2011 purchases have to abide by the new rules.

So, before you start using your FSA money, make sure you check with your plan so that you understand the new rules. You don’t want to find out the hard way.

This is a guest post. Miranda Marquit is a journalistically trained freelance writer and professional blogger working from home. She has been a contributor for Mainstreet.com, Personal Dividends and several other sites. Miranda is not affiliated or endorsed by LPL Financial.

The opinions voiced in this material are for general information and are not intended to provide specific advice and/or recommendations for any individual.

photo credit: sparktography

It’s a new year, and that means many of us are setting our financial goals and our budgets for the coming months. You want to make sure that you are prepared for the coming year, and that your money is ready for the next few months. Here are some steps you can take to help you as you create your budget for the new year:

Also, understand that if you get off track, you can make adjustments to return to your budget. Don’t assume that because you slip up one month there is no reason to try to stick with your budget going forward. Instead, resolve to do better moving forward and adjust your money habits to get back in line with your budget.

This is a guest post Miranda Marquit is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for Mainstreet.com, Personal Dividends and several other sites. Miranda is not affiliated or endorsed by LPL Financial. The opinions voiced in this material are for general information and are not intended to provide specific advice and/or recommendations for any individual.

photo credit: Camera Eye Photography

After living in our first home for almost five years, we were ready to upgrade. With a second child on the way (and at least a third in the not too distant future) we needed more space, so we knew it was time for a larger house. We took a bit of a different approach in that instead of buying a bigger home, we opted to build our dream home. Are you considering an upgrade to a bigger home? If so, I’ve asked Miranda to offer her take on whether an upgrading to a bigger house makes good financial cents for your situation.

Today’s low home prices and low interest rates are making home ownership more attractive to many. And, while first time home buyers are getting in on the act, they aren’t the only would-be buyers interested in making a home purchase. Plenty of current home owners are considering upgrading to a larger home.

In many markets, home owners are looking at homes in the next price range up as good buys, since foreclosures and a slow market are resulting in good deals. But, as tempting as it is to upgrade to a larger home, is it really a good idea? Here are some things to consider before upgrading to a larger home:

Why Do You Want to Make the Move to a Larger House?

photo credit: markbult

Consider your situation. Sure, a bigger, nicer house is a plus, but is your decision based on some sort of notion of status? If your main motivation is to impress others with your bigger home, it may not be the best reason. However, if your family is starting to outgrow your current home, or if you believe that you would enjoy a better quality of life in a nicer home, then it might worth considering making the move.

What’s the Situation with Your Current Home?

The biggest issue with upgrading to a larger house is that you still have to sell your current home. Consider the market in your area. How long is the home likely to be on the market? Are you getting a good enough deal on the larger home to make up for any price cuts you will have to make to sell your current home in a timely manner? Another concern is that your current home may not yield enough of a down payment, due to its own home value issues. If your current home is underwater, or if getting approved for the newer home depends on selling your current house, you may not even have the option of upgrading to a larger house.

Are You Prepared for the Costs of Moving Up?

Before you decide to upgrade to a larger home, consider the additional costs. Not only do you have to think about an increased mortgage payment, but your home insurance and property taxes will increase your costs as well. On top of that, there are costs associated with moving, and you may need to buy more furniture, or make changes to the home. Utilities in larger homes are more expensive, as is yard care and home maintenance. If the home has been foreclosed on, there may be some home repairs necessary. You may not be prepared for the additional costs associated with a bigger home.

Can You Handle the Home if it Doesn’t Appreciate?

Taking on extra debt is always something to be approached with caution — especially if you are planning on upgrading to a larger home. Many people feel that a larger home would get more bang for the leveraged buck, since the appreciation would make up for it. But, even if you buy at the bottom of the market, there is no guaranty that your home will appreciate in value at the rate you expect. As we saw not too long ago, the real estate market crashes, just like everything else. If you are banking too much on a larger home as an investment, you might be disappointed. Consider upgrading as a purchase, rather than an investment likely to yield big returns.

This is a guest post by Miranda Marquit. Miranda is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for Mainstreet.com, Personal Dividends and several other sites. Miranda is not affiliated or endorsed by LPL Financial. The opinions voiced in this material are for general information and are not intended to provide specific advice and/or recommendations for any individual.

photo credit: rutlo

Yesterday, I offered my take on when it might make sense to rent a home vs. buying. Today, Miranda offers her two “cents” on the topic.

One thing that the housing market crash taught us is that not everyone is ready to buy a home. We are so used to thinking of home ownership as part of the American Dream that we sometimes forget that it is impractical for some people to buy a home. However, if you are in a stable financial position, and you have prepared ahead of time, it can make sense to buy. You can use an online calculator to help you make that decision. Here are some things to think about as you consider whether or not you are ready to buy a home or keep renting:

Renting Vs. Buying- All Comes Down to Your Finances

In some cases, you are better off renting while you organize your finances, and figure out what you will be doing for a while. Before you buy, make sure you that you can truly afford the home, and run the numbers. There are some people who rent for years and years, perfectly happy to avoid some of the hassles that come with home ownership, and to invest money they would be paying on home expenses for larger returns. Be sure to figure out how much the tax break will really help you, and make sure that you are truly in a position to buy before you take the plunge.

This is a guest post Miranda Marquit is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for Mainstreet.com, Personal Dividends and several other sites. Miranda is not affiliated or endorsed by LPL Financial. The opinions voiced in this material are for general information and are not intended to provide specific advice and/or recommendations for any individual.

The American dream for many people may be to become a homeowner, but it doesn’t always make sense to buy. There are times when it makes more sense to rent. After graduating college, I was still single (but dating my future wife to be) and I had the opportunity to buy a house with some buddies of mine. Having the mentality that it’s always better to buy than rent I almost nearly pulled the trigger. Luckily, “sense” kicked in (or should I say my future wife ) and I opted to not buy it. Primarily, because we had no idea what the future held and it made more sense to just rent and leave our options open. In our case it didn’t make sense to buy, but that could be different for your situation. If you’re thinking about buying a house, here are some tips to know when renting makes more sense:

Your Credit Is Less Than Great

While it’s often possible to obtain a mortgage with a less-than-perfect credit score, the lower your credit score the higher your interest rate will be. A FICO score that’s below 620 will pretty much guarantee the only mortgage lender you qualify for will be a “predatory lender”. Until you’re able to improve your credit score, people with low credit scores might want to consider renting instead of buying a home.

Although young, this did not affect us. We had excellent credit scores at the time and that proved to be vital when it was time to buy our first home.

Frequent Job Relocation or Employment Instability

Does your job require you to relocate often, or is there a chance you will have to relocate sometime within the next few years? If you have to sell a home, it needs to appreciate a minimum of 10% in order to cover the expenses associated with selling. If your home doesn’t have time to appreciate in value, you’ll lose money when you sell it. One common example is if you are in the military where you’re always on the move. Unless you are quite certain you aren’t relocating any time soon, renting is probably a better solution.

While there is no such thing as job security, you probably have a reasonable idea whether or not you have a chance of being laid off or fired. Keep in mind that compensation during unemployment is rarely (if ever) enough to replace your lost income; and during tough economic times you can’t assume you’d be able to run out tomorrow and find a new job. If there is a good possibility you could be laid off or fired, renting makes more sense. When you rent a home, you may have to downgrade to a lower-rent apartment; but if you own a home and can’t keep up with the mortgage payments, you’ll go into foreclosure and damage your credit.

Unable to Afford Home Maintenance and Repairs

photo credit: kfisto

When you buy a home, you need to consider more than just the mortgage and taxes associated with the home. Experts predict that homeowners need about 5% of the home’s purchase price available to maintain the home or make repairs. I know that I’m no “Jack Handy”, so if something breaks; I’m calling the repair man to fix it. After paying the routine expenses of owning a home, will you have additional funds available for maintaining and repairing it? If not, renting is a better option since the landlord or management company is responsible for maintenance and repairs of the property.

When Renting Costs Less

Finally, one of the most obvious reasons for choosing to rent instead of buying a home is when renting simply costs less. If you can rent a property for $2,000 a month and it would cost you $6,000 a month to own a similar property – does becoming a homeowner make financial sense? Some people argue that the tax deductions available for homeowners actually make home owning more attractive than renting, but the deductibles rarely add up to the additional expenses paid.

If you’re still not sure that’s why it always makes sense to to talk with qualified financial planner or tax professional to help analyze your situation. I’ve seen too many cases where young people were so eager to “live the American Dream” and get their first home that they didn’t realize all the little things that come along with being a homeowner. Slow down and do your homework before you take the plunge. Remember the friends that ended up buying the house we were living in? They still own itand have been trying to sell it for over two years.

photo credit: ASurroca