Lazy Man and Money

Laid Off? Some Survival Tips.

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I got a sad email from Candi yesterday (name changed to protect the innocent):

[blockquote]Help, I have been layed off and will no longer be able to keep up on the mortgages (2) or bills. Family of 5. Husband works still but I made so much money previously that our income is cut more than in half. I was told by someone that the world is going to h*ll and we need to sell everything and stock up on food and prepare to just survive. I am afraid for us.[/blockquote]

The easiest way out is to simply move to Belgium and sell your children You’ll make money while reducing your cost of living. I joke (don’t even try it’s illegal), but in times like this I try to remind myself that laughter is free.

On a serious note, I got a similar e-mail last May. It led me to write these tips. I am surprised that many of the tips still apply. That should go a long way towards righting the ship.

I did list some ways to save money, but here are some more ways to save on clothing, movies, music, television, and books, razors, hobbies, gas, housing, groceries, and almost anything on the Internet.

I’d focus on some of the big things. I don’t want to go all Suze Orman or Larry Winget on you, but the two mortgages is a problem. Are you at least renting out one of the places? Some income to offset the mortgage is better than none. Can you sell one, even if at a loss?

I don’t have a lot more information to work with here. One thought is that if you have new cars of significant value you may be able to sell them and pick up servicable cheap ones (a used Kia or something). It will get you from point A to point B and either put money in your pockets or reduce your payments. Another thought is to look at refinancing the mortgages at today’s low rates. If the homes lost a lot in value, it might not help, but it’s worth looking at.

I don’t know what Candi’s job was or what her prospects are going forward. It’s hard without knowing a profession or region. I just hope she isn’t the only lumberjack living in New York City or a similar situation where you would expect jobs to be extremely rare.

Getting Answers To Your Financial Questions

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Every so often, I get questions from readers. I’d love to get more (contact me) but sometimes the questions I do get deal with topics that are a little outside my level of expertise. When this happens, I often try to direct the person to place that I think can help them find an answer. It may be a specific blogger that I know writes about the topic fairly often. However, it might be some very helpful forums. I’ve been spending some time on Wesabe Groups and find that there’s a nice community there. While I haven’t spent much time there, I’ve also read a lot about the Get Rich Slowly Forums. These are two places where you can ask questions and get a variety of answers – surely some good and others bad. As always, you’ll have to be your own judge on the best path to choose.

The question that spurred this comes from “Jonathan Papelbon” (a name I’ve picked to protect the original writer’s identity):

I bought a house a year ago, and now Zillow shows that it has lost 12% in value!!! I am paying an interest-only loan for 7 years (6 years left), and I don’t know what to do. Should I start putting money toward the principal so that when I want to sell, I will be able to break even? Or should I continue to put $$ toward other debt and savings? This is not just a decision for me, my wife does not want to be stuck here for too many more years, in case we need to move into a bigger place if we start a family.

I made an attempt to answer the question, but mostly I cautioned him about the dangers of interest-only loans and using Zillow as a guide (though it works well for many properties). The other thing that I wanted to note is that extra money saved in a bank account might be better off than put towards paying off the loan. Why? Well if you use up this buffer and then run into a few bad months, lenders will have no sympathy for you. However, if you can make the regular payments and keep that buffer money for a future rainy day, the lender won’t know it’s raining for you.

This is kind of an open question and I’m sure if we had full information someone could really give great advice. However, perhaps you’ve found something here that I missed. I’ll be the first to admit that I don’t follow interest only loans because I’ve always avoided them. If you have some good ideas please let them in the comments.

Best Credit Card for Foreign Travel? (Ask the Readers)

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Last week, I mentioned how my wife and I are going on ambitious trip to Phuket (and Australia). It’s been a little while since I went outside the US. Last year, we went to Aruba, but I’m so familiar with saving money in Aruba, that I didn’t feel the need to conserve every last cent. More importantly, they accept US Dollars so there’s no conversion.

Australia and Thailand are two different monsters entirely. I have no clue what to expect for prices. I’ve heard that credit card companies can play some tricks with conversion rates and fees. For example this article from Bankrate says that there are a couple of fees, one from Mastercard and Visa and another from the issuing bank. I’d like to be able to use my credit as a savings tool like I do in the US earning cash back when possible.

It looks like Capital One may have one of the lowest fees, but I don’t feel comfortable with them since they hate the environment.

In the end, we’ll probably take advantage of the USAA and their debit card. They promise no fees even abroad. Seeing how they are affiliated with the military, I think I trust them to get me a good exchange rate since they aren’t for big profits like other banks… Or else I’ll just check out some of these credit card reviews.

Angie’s List: Any Good?

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Longtime readers know that while I live near San Francisco, my wife and I own rental properties in Boston. We didn’t set out to buy them as an income stream. She owned her place before she met me. I bought my place soon after we started dating. While neither one of us intended to move to San Francisco, my wife’s career stood to significantly benefit from relocation.

As you may have heard, it’s not a good time to sell homes. Having bought out homes in 4 and 7 years ago at near market highs, there wasn’t a lot of money to be made by selling. In fact, my condo would sell for about $20,000 less than what I paid for it. As such, we decided to keep the properties and instead rent them out. My theory is that in 30 years, we’ll have no mortgage and a nice income stream – even if things look “break even” today.

Unfortunately being a landlord 3000 miles away isn’t easy. While we’ve been blessed with good tenants, the place is going to need maintenance from time to time. Bath tubs don’t caulk themselves. It’s not very economical for me to fly back, so I’m in the search of a good handyman in the Boston Metro West area.

This is when I saw an ad for Angie’s List. I’m already a huge fan of Craig’s List, so why not give Angie a shot? When I got to Angie’s website, though, there was a surprise. It wasn’t a free service like say 1-800-Dentist as I suspected. You have to pay monthly fees to be a member and find a handyman. The first month they even hit you with set-up/activation fee. I’ve joined a lot of websites in my time, and I can’t imagine what set-up/activation they have to do. It seems clear to me that this is a way to get someone to spend around $25 up front when they just want the name of a handyman (as in my case).

I’m not against paying for something, but give me a demo or something so I can see what the service does and how it works. Let me know how many handymen are in the area that I want. My wife’s place is close to Worcester, MA which is a good hour from Boston. Angie’s List’s Boston community may or may not be helpful in that case. They should at least tell me that up front.

To Angie’s List credit, they offer a 110% price protection… if you are not satisfied you get your money back… and then 10% on top of that. However, I’m always skeptical of those deals. It seems like there would be a lot of hoops to go through and if they decide not give you your money back, are you going to hire a lawyer to recoup your $25? Of course not. It’s much easier to keep the $25 in your wallet until you know what you are buying.

I’m starting to think that Angie’s List isn’t very helpful and that I should look other places for my handyman. Before I give up, I thought I’d put the question out here. Do you use Angie’s List? Where do you find a good handyman if word of mouth fails (as it has for me)? Perhaps Craig’s List is the answer for this too?

Finovate Start-up: What Would You Ask Vestopia, SmartHippo and other companies?

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finovatestartup.gifThis Tuesday, I’m heading to Finovate Start-up hosted by Jim Bruene of NetBanker fame. There are a ton of companies presenting there. Some of the highlights that I’m looking forward to are Buxfer, Loanio (are they ever going to launch), Mint, Prosper, SmartyPig, Wesabe, Zecco, Zopa. I’m disappointed that Geezeo isn’t going to be there. Lending Club bowed out, which is reasonable considering their quiet period.

I’d like to single out Vestopia and SmartHippo (not to be confused with SmartyPig or my upcoming start-up SmarterBoar). These companies have contacted me for one-on-one interviews. I’ve been able to secure a time with Vestopia, but I’m still waiting to hear back from SmartHippo. Other companies have tried to set up meetings with me, but since I don’t know what to expect, I’m trying not to over-extend myself.

I could really use your help coming up with questions for Vestopia and SmartHippo. I’m not very familiar with them, other than what I read on their websites, so you can figure out what I can. As best I can tell, Vestopia let’s you follow what Investment Directors are buying and selling – alerting you about the trade right away within 15 seconds of them doing it. There is a whole community aspect to the site as well. SmartHippo seems to be a community reporting mortgage rates from community members. I look forward to finding the value that this community provides, I found that I did extremely well doing a search for mortgages on Bank Rate. Maybe I got a lucky though.

So if you have questions that you want me to ask these companies – or any others, leave a comment or contact me. If there’s a company that you’d like to know more about, let me know and I’ll try to attend their product demo.