1 – If you are hoping for a huge change… this is not the answer. Not all changes are permanent and/or large. Some adjustments may last as little as 3 months.

2 – Loan modifications are not quick. If you can’t wait the standard 9 weeks for the review of your file and another 5-9 weeks for paperwork processing, you don’t have enough time and you may want to move forward with other options like a short sale or foreclosure.

3 – Give an accurate listing of all your expenses. Don’t exaggerate but don’t minimize either. Have a good understanding of exactly how much you are paying. Keep this information available for when you call the bank.

4 – You will be rejected if you have recently made large purchases or if your credit score is low. You shouldn’t be making large purchases anyway so I can’t say as if I blame the banks for this stipulation.

5 – If you have a second mortgage with another lender, they will likely require you to get approved for the Making Home Affordable Program on your first loan before they will consider a change to your second mortgage. If you are accepted for the program on your first loan, it’s easy to submit the same paperwork for your second mortgage.

6 – This should not be your only option. It’s worth a try, but don’t fool yourself into thinking this will solve your problems.

7 – If your home is not a Fannie Mae/Freddie Mac mortgage, this program does not apply to you… BUT some lenders are still willing to modify other types of loans.

8 – This is a voluntary program. No one HAS to help you. Sure it’s good business sense to lessen foreclosures on the banks part, but if you are a problem child, don’t expect any help. Banks don’t want to keep you as a customer anyway. Be kind, courteous, and polite even if you are frustrated.

According to the bank’s calculations, my husband and I qualify. We are now in the first 9 week waiting period while they review our files. We have stellar credit scores and we haven’t made large purchases in a long time. We are good candidates for an interest rate reduction from the over 7% it is currently, down to the market rates of 5-6%.

Do I really think it will really happen?

No. But it’s worth a try.

and applying for the Making Home Affordable program.

Yesterday, I left work early and made THE call. My call started at 5:07 p.m. and ended at 5:57 p.m.

I called the Making Home Affordable number on my Bank of America mortgage website and waited 17 minutes on hold. Someone answered and transferred my call since my mortgage used to be a Countrywide mortgage and they had a separate division.

I’m fairly certain they routed my call around the world because really, what else can explain the 24 minute hold time and the gentleman who sounded like had lunch in Bangladesh. He asked for my name, account number, checked my account, thanked me for paying on time, and told me I would be transferred yet again to a representative. 9 minutes later, a message said, ‘Our office is now closed. Please call back another time.’

I would give you advice on dealing with the Making Home Affordable program but since I didn’t talk to anyone, I will tell you this… you need more than an hour.

Dear Bank of America… I had far better things to do than spend 50 minutes of my life listening to Kenny G. and the recorded reminder that someone will be with me shortly. Obviously you and I have VERY different definitions of ‘shortly’ AND, I had to drink three glasses of Chianti just to keep my ears from bleeding.
Ugh. Kenny G.

I’ll let you know how it goes… if I ever get through.

My husband is attending a bachelor party this weekend and the event required one credit card to book the trip for all five attendees (the bill could not be split). Most of our friends know about our recent credit card payoff (maybe shouting that fact from my roof and breaking into song was a clear sign) and naturally suggested that since we ‘had the room’ on our card (as if it were free), that my husband pay for the entire trip and be reimbursed later.

I’m not going to lie. I am upset.

Perhaps I’d be more trusting if this hadn’t happened before with concert and event tickets and in the end, we were always short. People conveniently ‘forget’ to pay or promise to pay later and then get annoyed when reminded. Plus, the credit card will be kept on file in case there are damages to the room or if alcohol is consumed.

When I asked why someone else couldn’t pony up a credit card, he told me it was because everyone is nearly maxed out but us. Um… isn’t that a good reason NOT to loan these people our credit card?

My husband and I rarely fight but this is a sensitive issue for me and I feel like we are opening ourselves up to a lot of potential debt.

Am I overreacting?

Ann, a brilliant reader, also pointed out that if I paid off my student loan first, I would lose my tax deduction.

As someone who gets WAY too much joy from writing off the student loan interest, I am grateful to Ann for reminding me of this fact.

I’m sure a lot of you have student loans and this should be a consideration in your debt payment plan.

Thanks Ann!

Dave Ramsey suggests paying the extra amount on your lowest debt (which would be the student loan) but the minimum payment on our truck is more 4 times higher than the student loan. Plus, the interest rate on the truck is twice as much.

Another good reason to pay more on the truck is to quickly rid ourselves of the hefty payment. In the event of job loss, a student loan can be deferred due to financial hardship – auto loans are not nearly as forgiving.

We’re hoping to have the truck paid off in 10 months or less.

Here we go!

Total Starting Debt: $38,495.86
Total Paid: $16,727.33
Total Remaining: $21,768.53

Breakdown of Remaining Debt –
Truck: $11,934.57
Student Loan: $9,833.96

We’re nearly halfway there. I got an updated payoff date according to our Debt Snowball Calculator on DaveRamsey.com…

December 2010.

We shaved off 4 months so far. Can I get a Woo Hoo?

First off, I’d like to thank you for cashing my husband’s tuition check within 12 hours of receiving it. Who knew that was even possible? Though to be honest, I’m not quite sure why we pay two months in advance and are later reimbursed. It kinda sounds like a man I heard about… what’s his name? Ponzi?

Second, I recently received your request for an additional $150 per semester – as if the two thousand I just paid you was completely insufficient for a whopping six units… and let’s not discuss your $200 parking pass shall we? I was amused at the complete ambiguity as for the reasons why the additional funds were needed from all 30,000 or so students but I was NOT amused when I actually had to pay it. But hey, thanks for allowing me to defer this unexpected payment for three weeks. I guess that’s supposed to help me be happy about paying more and getting less? I have approximately $26 in my checking account. Clearly, I cannot spend $150 when I only have $26. Who do you think I am? The state of California?

Also, I want to thank you for delaying the receipt of my husband’s tuition funds for two months. Perhaps you are trying to help the business students perfect the art of living off ramen noodles and tuna and hone their negotiating skills with creditors?

When we called to check the status on the cash flow, you said the check was ‘in the mail’. 3 weeks have passed. Are the checks being personally delivered by a three legged dog on a skateboard? In short, in response to your request for additional funds…

The check is in the mail.

Sincerely,

The broke wife of a California college student

Why don’t you sell the truck?

I neglected to explain the reason we’re carrying the truck payment. It’s funny that no one noticed the debt on the truck earlier. It wasn’t until we paid down enough on the rest of our debt to make the truck HALF our total debt that someone asked about it.

My husband had a Chevy that gave out on us a few years ago and he’s one of those few people who actually need a full size truck for work. He tows trailers, fills it with concrete, moves landscaping, etc. A reliable full sized truck isn’t an option… it’s a requirement. We financed a Toyota truck for 26K two years ago and at the time, it was a great deal – or at least that’s what everyone likes to think after leaving a used car dealer.

Fast forward a few years, a few gas hikes, and a few construction related dents later and suddenly…

The truck is more than just a little upside-down – it’s hanging from its toe nails.

We’d MAYBE be able to sell it to someone for 8K… if we made them test drive it in the dark and promise them it got 58 miles to the gallon completely powered by canola oil. But since we’re honest folks, that’s not an option. Plus, we’d have to buy another full sized truck reliable enough to take the 25 – 30 thousand miles a year he drives for work.

Take the nearly 5 thousand we’d have to pay for our upside-down loan and add it to the cost of another truck and it just doesn’t make sense. I’d rather bite the bullet, pay if off by mid-year next year, and have a truck I know works for us.

While our relationship has been great and I have appreciated your monthly letters of good tidings, I’m afraid I have to end things. You see, I recently met with my tax man and he told me we’re getting back a small chunk of cash which means… all the money I’ve been saving can finally be used to rid myself of you.

I know you have lots of friends like me and you probably won’t miss me but I’m sure you’ll miss the nearly two years of interest I would still owe you if we continued to be friends.

Please don’t take this personally, your service has been exceptional. We’ve actually got along quite well the past few years but it’s not you… it’s me.

I wish you the best in your future endeavors… none of which will involve me.

All my love, but none of my cash,

Rebekah

We also received the original loan papers and it had “PAID IN FULL” beautifully stamped in red across the top. Perhaps I never really paid attention before, or perhaps I was in denial, but it says right there that the total finance charge for the loan was $3,541.90. That added another 25% to the cost of our car. 25%!! What were we thinking back then??

Lesson learned – attempt to purchase next car with cash, if possible.

I waited to announce on here until I saw the following:

The car is officially ours and no more car payment!

We could snowball that payment to other debt, but it looks like it will be used for health insurance. My husband and I do not have any, and the plan my son is on will be lost at the end of the year.

Of course, I will write more about that once I make some progress on getting that ready. The to-do list that I wrote to myself some time ago is not shrinking as quickly as I would like.

When Car Debt Turns Really, Really Bad brought me back in time almost 5 years ago.

We were looking to trade in our truck and buy a new vehicle. I had looked at the Kelly Blue Book value of our truck and I couldn’t believe it. The value of our truck was less than the amount we still had to pay on our loan. It wasn’t a large amount, but enough to make you feel uneasy when you want to trade a vehicle in.

We found our current car, and waited for the trade-in offer on our truck. They would pay off our loan in full and that was it. Since I did the research I was happy with that. But part of me wishes we didn’t extend our financing on the truck for so long (6 years). The few extra dollars a month would have provided some downpayment on our current car. But at the time, you don’t really think about it. We learned a lesson, and we bought our car under a 5-year loan. Not the best, but definitely better than a 6-year loan.

In September, our car will be paid off and it will still has value! Part of it probably has to do with it being a car that is known to hold its value well, but another big part is that we didn’t go for a longer term loan even though they offered it.

Of course, I hope to pay cash the next time we buy a newer used vehicle, but if we can’t we are getting the shortest term loan we can (hopefully 3 years).

Turns out maybe something can be done and we all have until June 30th to make it happen. U.S. News & World report has an article on cutting your student loan costs. There is also an article to read that details when it might be best to not consolidate your student loans.

If you have student loans, make sure you check out the articles.

If she just mentioned it now out of the blue, so it must mean that they need it. It is a chunk of change ($1,775). I did have the money set to go to the credit cards, but I think I’d rather just pay the loan in full. Sure, it’s interest-free but it’s family.

Ouch, another big bump in the road and just a few days after announcing the goal date. I think I will leave the goal date intact for the time being because time is limited to run all the scenarios again.

And really, I already set it – let’s see what can happen. The worst that could happen is we don’t make it, but I bet a heck of a lot of progress will be made trying to make it – more so than if no goal was set

Tags: bank, loan

About two years into the loan, I learned that you could refinance your auto loans. I thought that was a great idea and it would help to negotiate a lower interest rate and receive a lower monthly payment. I cannot remember what company we tried, but we were denied. They said we had too much debt and were too much of a risk.

After getting turned down, I too easily gave up and didn’t try another company (which I realize now was a mistake on my part). I also should have tried going to a bank and seeing if they had a loan with a lower interest rate.

I am happy to report that our vehicle will be paid off in September of this year, and as it stands right now, our vehicle is still worth $6,000. That is a little less than half of the price we paid for the car, so I believe our car has held up in value quite a bit. I want to have a little party when our car is paid off. It will actually be ours and not the banks!

Technorati Tags: auto+loan, refinancing

The first one is income-based. They actually will consider your income and determine how much you can pay per month. This can be nice when you are still looking for after-college employment and enter repayment on your loan.

The second option is the graduated payment. With this option, you start off just paying the interest on your loan. This leads to a lower monthly payment. Then, after a certain timeframe, your monthly payment is increased. It will keep increasing (graduating) to a higher monthly payment until the loan is paid in full.

For our student loans, I decided to have both of them under a graduated payment for the time being. As soon as the credit cards are paid off, then I will probably change the status of our school loans to a normal payment plan and even send additional payments.

There is a downfall to the graduated payment plan. I will end up paying more in interest and the total amount that I will have paid to my lender is quite substantial. But, at the time it is the best option.

The important thing is to choose the option that is best for you.

Technorati Tags: student+loan+debt, debt, payment+plan, credit+cards

I actually went into two banks and discussed the possiblity of getting a personal loan to pay the credit card so then I can turn around and transfer the loan balance right back to the credit card (to take advantage of their 0% interest balance transfer offer).

I had all of my papers with me, including the offer from the credit card stating the end date to accept the balance transfer offer.

It didn’t take long for them to say “No.”

I briefly then considered finding a loan shark, but decided against that choice. I guess I will get rid of Credit Card #1 the old fashioned way.

Technorati Tags: balance+transfer, personal+loan, interest+rate

Make sure you read the fine print.

The rates on these short-term loans are astronomical. Is it really necessary that you have the money right now? Is it possible to get an interest-free cash advance from your employer? Even if it is difficult to ask your employer, it is worth a shot.

Another thing to be careful of with these loans is getting in a viscious cycle where you are continually using the services because your normal cycle of pay day spending has been altered. Every time you get one of these loans you are paying a lot in interest.

Pay day loans can be great for times where you absolutely need the funds and you cannot get them any other way. Just be careful.

Technorati Tags: pay+day+loans, cash+advance

My student loans have been consolidated together. At the time, the interest rate wasn’t that low, but what it did was lump the debt together and I only had to make one loan payment a month. I really enjoyed that feature. My husband’s loans are also consolidated.

Now, why did we consolidate our loans together to have just one huge loan?? There are a few big reasons why we haven’t done that. Please note that this might not hold true for all consolidation vendors, but it did for the company our loans are through. The minute we put those two loans together, they cannot ever be separated. Now, I hope to be married for life, but things can happen. It’s not too hard to divide the checking account balance. It would be very difficult to try to split up student loan payments. So that is one reason. Another big reason is that both of our names would be tied to the large consolidated amount. If something happened to one of us, the other would be responsible for the full amount. As I understand it right now, if something happened to me tomorrow, my loan would be forgiven and my husband would not have to pay it back. That would not be the case if we combined our loans together.

Don’t take my word for everything here, because this has just been my experience. Things could be different for a company that you are consolidating your student loan debt through. Just be cautious and read the fine print.

Technorati Tags: debt, student+loan+consolidation, student+loan, consolidate+debt

To prevent this, try to find a nice gently used vehicle. The price is often more affordable and you will not suffer the huge loss in value that you encounter with a new vehicle. In a nutshell, you will get more car for your buck, financially speaking.

Unfortunately, mechanically speaking, that is a whole different story. Any car you purchase is worth trying to negotiate a warrenty.

Technorati Tags: auto+loan, car+loan, down+payment, car+value

It may be hard to believe, but my home only cost $35,500. This value reflects the general real estate trend of the area. Most homes are very affordable where I live compared to big cities. If I was living somewhere else with my income, I would not have been able to purchase a house.

When I applied for mortgages, even obtaining one for $35,500 was a challenge due to my debt. But I was working with a wonderful woman who tried her hardest to get my family into a home. And she was able to do it.

Technorati Tags: mortgage, mortgage+debt, real+estate

At the time, it seemed like a good idea. Take out a loan to help pay for books and such in addition to your schooling. You don’t really think about what you are going to have to pay once you get out of school. What’s another grand in debt, right? That was my attitude.

I often wonder what it would have been like if I was able to graduate from college debt-free. There is actually someone I know who is trying his hardest to make sure his daughter graduates from college without debt. He is practically putting himself in debt to try to make a nice transition for his daughter into the real world.

You know how I feel about debt, and I will say often that I wonder what it would be like if I didn’t ever have it. But deep down, I think having that mountain of debt when I ventured into the real world has helped me grow up ALOT. While others were partying, I was working trying to pay all the bills. I think I turned into a responsible adult as an indirect result of my debt. But, enough of that. I still don’t like debt

Technorati Tags: debt, student+loans, college+debt