How should a newlywed couple save up for a house?

[sb129]

We recently switched to a lower fixed interest rate which reduced our monthly payments by about a quarter.

 

And I have had "payment holidays" in the past.

[Mary3]

Your example suggests you know how to manage money, but the story above has no relevance to the scenario YOU provided us from Suze:

 

 

 

So, she says that if you have an existing credit card debt, you should only pay the minimum balance and save any extra money you have as cash.

 

We, (and you!) say it's bad to have a credit card balance because you pay a lot of interest on it.

 

It seems you know Suze's advice is stupid but just haven't realized it.

 

I apologize for spelling minimum wrong twice , lol...

 

I will repeat. Credit cards are evil. ( Well actually its not the card thats evil , its the corp. taking an opportunity to milk the consumer for every thing they do that falls short of the rules . I only want one except for emergencies.

 

Have you done in depth study of all the ways the CC scre*- the consumers who were faithfully paying ~~~~ ??? ( lower credit line , raise interest and all the fees ) . I didn't mean the deadbeat or the laid off workers ...But the customer that's been there for 10 + years....and never missed a payment and now is paying 25-30% interest..

[Mary3]

We recently switched to a lower fixed interest rate which reduced our monthly payments by about a quarter.

 

And I have had "payment holidays" in the past.

 

Ahhhhhh.....payment holidays....but your interest is still accruing and they will get MORE out of you on the pay holiday....

 

Have you been able to find 1%....just curious ?

[Star Gazer]

Our CC bill wasn't that big, which is why it seemed stupid to let it languish when we could afford to pay it off.

 

You have to pay the CC bill eventually- why leave it to accumulate 8 more months of interest?

 

Any particular reason why you would stash it rather than reduce debt?

 

Why? Because of the underlined part above. Your argument assumes you can afford to pay it off. Like Suze said, people with exhorbitant CC debt CAN'T pay it off. They got into that CC debt for a reason - because they didn't have the money to begin with. People like you and I, who can afford to pay off CC debt, don't have it in the first place.

 

So if someone finds themselves in the situation where they have high CC debt, and have to worry about the economy (losing their job, which leads to losing their house, their car, etc.), they likely are in a position where they need to make a choice about what to do with their money. If I had to make that choice, in this dangerous economic time, I'd choose to save/protect my hide rather than pay down debt. I'd rather still be in my home 2-3 years from now, than have no CC debt.

 

Honestly, I don't think you guys outside the US really understand how bad it is here. Every single day, you see another company going under, laying off hundreds, if not thousands. I'm lucky that I'm protected and feel safe, but many are not. If in their shoes, I'd be more concerned about losing my job and having no income, and thus worried about maintaining the roof over my head, than CC debt. I mean, seriously.... what are the CC companies gonna do? Take my clothes and CDs or old vacations away from me? No. But the big banks WILL take my house or car if I don't pay them, so I have to save enough for an extended period to make sure THAT doesn't happen if the pink slip arrives. Once I have enough to protect myself from losing my house and car, THEN I can pay down other debts.

 

And guess what? That's exactly what I did. I saved, so that if/when something happens to my job (or my mother's), I won't have to worry about survival... and now I can work on paying down the only debts I have (student loans).

 

I feel SAFE that way.

 

Banks will renegotiate mortgages, thus size of mortgage payment, in times of hardship, particularly with the current state of the economy and real estate market. What bank in their right minds want you to be unable to pay your mortgage, thus foreclose on an upside-down home?

 

Orman's out to lunch.

 

My mom, as well as about half of my friends who are homeowners, are upside down in their homes. Luckily, my mom's mortgage is reasonable and she'll be able to stay for a long, long time, but the rest aren't, and trust me, the mortgage companies aren't doing a THING to help.

[Mary3]

Why? Because of the underlined part above. Your argument assumes you can afford to pay it off. Like Suze said, people with exhorbitant CC debt CAN'T pay it off. They got into that CC debt for a reason - because they didn't have the money to begin with. People like you and I, who can afford to pay off CC debt, don't have it in the first place.

 

So if someone finds themselves in the situation where they have high CC debt, and have to worry about the economy (losing their job, which leads to losing their house, their car, etc.), they likely are in a position where they need to make a choice about what to do with their money. If I had to make that choice, in this dangerous economic time, I'd choose to save/protect my hide rather than pay down debt. I'd rather still be in my home 2-3 years from now, than have no CC debt.

 

Honestly, I don't think you guys outside the US really understand how bad it is here. Every single day, you see another company going under, laying off hundreds, if not thousands. I'm lucky that I'm protected and feel safe, but many are not. If in their shoes, I'd be more concerned about losing my job and having no income, and thus worried about maintaining the roof over my head, than CC debt. I mean, seriously.... what are the CC companies gonna do? Take my clothes and CDs or old vacations away from me? No. But the big banks WILL take my house or car if I don't pay them, so I have to save enough for an extended period to make sure THAT doesn't happen if the pink slip arrives. Once I have enough to protect myself from losing my house and car, THEN I can pay down other debts.

And guess what? That's exactly what I did. I saved, so that if/when something happens to my job (or my mother's), I won't have to worry about survival... and now I can work on paying down the only debts I have (student loans).

 

I feel SAFE that way.

 

 

 

My mom, as well as about half of my friends who are homeowners, are upside down in their homes. Luckily, my mom's mortgage is reasonable and she'll be able to stay for a long, long time, but the rest aren't, and trust me, the mortgage companies aren't doing a THING to help.

 

Thank You ! Very well put !

[Trialbyfire]

Both Stargazer and Mary3 are right, at least from my perspective, that I don't know how bad it is in the U.S. with banks.

 

I do know that here, if you need to discuss something with your bank, you call your personal banker to make an appointment, arrive at the appointment, they do whatever's necessary and you're out, possibly to return another day, to finalize any paper work.

[Mary3]

Both Stargazer and Mary3 are right, at least from my perspective, that I don't know how bad it is in the U.S. with banks.

 

I do know that here, if you need to discuss something with your bank, you call your personal banker to make an appointment, arrive at the appointment, they do whatever's necessary and you're out, possibly to return another day, to finalize any paper work.

 

Well TBF this is how it works here : You call your bank.

They ask how they can help.

You say I am in serious trouble , job loss , death , and I need help .

" Hold Please "

Music plays....you hear Oasis and Men at Work songs along with 43 other songs...

The recording says " Thank you for holding...please continue "

45 more minutes go by...

Someone finally answers !

" Yes may I help you ? "

I need help paying my loan.

" Oh hold please " Now elevator music plays....

You wait 25 more minutes.

The line goes suddenly busy and asks you to please call again. REPEAT this everyday for 6 months.

 

Thank you.

[Trialbyfire]

Well TBF this is how it works here : You call your bank.

They ask how they can help.

You say I am in serious trouble , job loss , death , and I need help .

" Hold Please "

Music plays....you hear Oasis and Men at Work songs along with 43 other songs...

The recording says " Thank you for holding...please continue "

45 more minutes go by...

Someone finally answers !

" Yes may I help you ? "

I need help paying my loan.

" Oh hold please " Now elevator music plays....

You wait 25 more minutes.

The line goes suddenly busy and asks you to please call again. REPEAT this everyday for 6 months.

 

Thank you.

Okay, that's call centre style where you need to select the following options, in a number of cycles.

 

Why wouldn't you just say, "I need to renegotiate my mortgage" and forget the rest of the story?

[Star Gazer]

I do know that here, if you need to discuss something with your bank, you call your personal banker to make an appointment, arrive at the appointment, they do whatever's necessary and you're out, possibly to return another day, to finalize any paper work.

 

Do you think Joe Schmoe from Podunk, Utah (or better yet, Stockton, California - foreclosure capital of the country!), who's 43% upside down in his house, and just got laid off from his $16/hour job at Widgets R Us - in other words, your current average American - has a "personal banker"?

[Star Gazer]

Why wouldn't you just say, "I need to renegotiate my mortgage" and forget the rest of the story?

 

That's a myth. In general, you have to be 5-6 months behind and prove you're truly unable to pay, with the Sheriff nearly on your doorstep ready to oust you, before they'll even talk to you about your situation. In other words, you have to eff your credit to "renegotiate."

 

However, this still does nothing for the "what do I pay down first?" argument.

[Trialbyfire]

That's a myth. In general, you have to be 5-6 months behind and prove you're truly unable to pay, with the Sheriff nearly on your doorstep ready to oust you, before they'll even talk to you about your situation. In other words, you have to eff your credit to "renegotiate."

 

However, this still does nothing for the "what do I pay down first?" argument.

It's not a myth here. We're able to renegotiate our mortgages quite easily and for that matter, get consolidation loans, etc. Don't forget I work in the finance industry so I'm familiar with how things work, at least in Canada.

 

Now in the U.S., it's true I can't say. Perhaps people who've had job loss and didn't have a nest egg to fall back on, could pipe up.

[Mary3]

Okay, that's call centre style where you need to select the following options, in a number of cycles.

 

Why wouldn't you just say, "I need to renegotiate my mortgage" and forget the rest of the story?

 

The point is that they get 1,000's on requests for the bank to revalue their property and remodify the loan payment. They KNOW how to treat the suffering souls ALL the same way,,,

 

Of interest, You know the HOPE loan ? Well guess how many applied for that ? 400,000 people. Guess how many were accepted ? 67 people.

 

Its voluntary for the banks so you see what they think of it , eh ?

[Trialbyfire]

The point is that they get 1,000's on requests for the bank to revalue their property and remodify the loan payment. They KNOW how to treat the suffering souls ALL the same way,,,

 

Of interest, You know the HOPE loan ? Well guess how many applied for that ? 400,000 people. Guess how many were accepted ? 67 people.

 

Its voluntary for the banks so you see what they think of it , eh ?

Where did you get that statistic from? Can you link it?

[sb129]

Ahhhhhh.....payment holidays....but your interest is still accruing and they will get MORE out of you on the pay holiday....

 

Have you been able to find 1%....just curious ?

 

Yes, the interest accrues- which is why I wouldn't take another payment holiday unless I was desperate.

 

1%- do you mean an interest rate? who loans money at 1%- can I have their number?

 

Your argument assumes you can afford to pay it off. Like Suze said, people with exhorbitant CC debt CAN'T pay it off.

So if someone finds themselves in the situation where they have high CC debt, and have to worry about the economy (losing their job, which leads to losing their house, their car, etc.), they likely are in a position where they need to make a choice about what to do with their money. If I had to make that choice, in this dangerous economic time, I'd choose to save/protect my hide rather than pay down debt. I'd rather still be in my home 2-3 years from now, than have no CC debt.

 

Ok, I see your point now. And that isn't the kind of position we were in- thankfully.

 

Honestly, I don't think you guys outside the US really understand how bad it is here.

 

No, I accept that I probably don't.

So its easy for me to preach from the position I'm in, which is fortunately not too bad.

 

Both Stargazer and Mary3 are right, at least from my perspective, that I don't know how bad it is in the U.S. with banks. .

I agree- I don't know either. And I guess its relevant to this thread if the OP is in the US.

I do know that here, if you need to discuss something with your bank, you call your personal banker to make an appointment, arrive at the appointment, they do whatever's necessary and you're out, possibly to return another day, to finalize any paper work

 

Yeah its pretty much like that here. But our country is tiny- less than 5million people.

 

Well TBF this is how it works here : You call your bank.

They ask how they can help.

You say I am in serious trouble , job loss , death , and I need help .

" Hold Please "

Music plays....you hear Oasis and Men at Work songs along with 43 other songs...

The recording says " Thank you for holding...please continue "

45 more minutes go by...

Someone finally answers !

" Yes may I help you ? "

I need help paying my loan.

" Oh hold please " Now elevator music plays....

You wait 25 more minutes.

The line goes suddenly busy and asks you to please call again. REPEAT this everyday for 6 months.

 

Thank you.

 

It was like that in the UK.... with EVERYTHING.. which is why my H and are regularly pleasantly surprised at how things happen here.

[Mary3]

Where did you get that statistic from? Can you link it?

 

I would be very happy to : Give me some time...

[Mary3]

Don't look for the government to rescue us. Congress has flopped trying to play Zorro with bad mortgages. According to the Associated Press, the Hope for Homeowners program, designed to let 400,000 troubled homeowners swap risky loans for traditional 30-year fixed-rate loans, has refinanced only 25 loans since it started in October.

 

At that pace it will take 5,000 years to help the promised 400,000. Hope you got the extended warranty on the Owens-Corning shingles.

 

 

http://www.tampabay.com/news/business/realestate/article973667.ece

[Trialbyfire]

Don't look for the government to rescue us. Congress has flopped trying to play Zorro with bad mortgages. According to the Associated Press, the Hope for Homeowners program, designed to let 400,000 troubled homeowners swap risky loans for traditional 30-year fixed-rate loans, has refinanced only 25 loans since it started in October.

 

At that pace it will take 5,000 years to help the promised 400,000. Hope you got the extended warranty on the Owens-Corning shingles.

 

 

http://www.tampabay.com/news/business/realestate/article973667.ece

That article was from February, 2009. There've been changes put into place since May 29, 2009, when Obama signed on the dotted line.

[Mary3]

That article was from February, 2009. There've been changes put into place since May 29, 2009, when Obama signed on the dotted line.

 

Let me look into that...

[Mary3]

Let me look into that...

 

http://www.whitehouse.gov/the_press_office/reforms-for-american-homeowners-and-consumers-president-obama-signs-the-helping-families-save-their-homes-act-and-the-fraud-enforcement-and-recovery-act/

[Trialbyfire]

http://www.whitehouse.gov/the_press_office/reforms-for-american-homeowners-and-consumers-president-obama-signs-the-helping-families-save-their-homes-act-and-the-fraud-enforcement-and-recovery-act/

I was off by 9 days.

 

Let's see if this makes a difference.

 

Btw, Hope loans have been around for much longer than last October. If you google a bit, you'll find that between 2007 - 2008, there were over one million American home owners who received some form of help, from it.

[GorillaTheater]

Is this a good place to urge people (for God's sake) to get 10 or 15 year mortgages instead of 30 year mortgages? Calculate and compare the amount of interest paid over the life of the loan.

[BUENG1]

That's a myth. In general, you have to be 5-6 months behind and prove you're truly unable to pay, with the Sheriff nearly on your doorstep ready to oust you, before they'll even talk to you about your situation. In other words, you have to eff your credit to "renegotiate."

 

However, this still does nothing for the "what do I pay down first?" argument.

 

About the credit cards. I guess I can see your point if you are worried about the cc company cutting your credit line(substantially). But that will only be meaningful if your card is maxed(they cut back to $2000 limit and you have $2200) on the bill. If you have $1000 bill and they cut back from $3000 too $2000 it will make no difference($1000 plastic, an an extra $1000 cash, versus $2000 plastic - and whatever interest you paid). The more likely scenario is they would raise your rate and you will be stuck with possibly an extra 3 or 4 percent(or more), and you will likely not want to opt out if you are worried about job.

 

Though besides this scenario(imo) it is beneficial to pay off your bills hypothetically get laid off four months later, and simply charge whatever amount you paid back to live off of.

 

Even though I guess you can't use your credit card everywhere as cash, you can have balance transfers deposited to your account as cash(most of the time I think) or if you are desperate you could pay families and friends bills etc with the credit card and ask for cash.