The lack of common sense in lending standards. They control them since they own Freddie and Fannie. Just ask anyone how difficult it is to get a mortgage done today. It takes an act of Congress – and that act is all about saying NO.

But Mr. Frank and so many others, including Mr. Trump, keep telling us “the banks won’t lend”. I can’t explain Trump’s motivation to mislead, but I can understand the government’s. Frank and the rest of the folks in charge just don’t know what they’re doing.

Sure, lending standards went too far – like many examples of economic excess. And – like all examples of economic excess followed by a crash, the government reacts violently in a manner that brings the gears of progress to a grinding halt.

And so it is with lending – the government has shut things down. Consider the following example:

• Stated income loans are dead – but housing is in dire need of them. The idea is simple – many people (especially the self employed) are challenged in documenting income, so lenders typically look at collateral (the home) for repayment in the case of default.
• A guy with a lot of money in the bank that is self employed and whose aim is to minimize his tax liability looks poor on paper – yet he has the dough to afford the loan. But his tax return is his proof of income – and since he can’t prove it, he needs a stated income loan. SO – if he owes only 50% of the value of the home – WHY CAN’T HE GET A LOAN? This is a sweet loan! If he defaults, the lenders takes his house and dumps it…easily recovering the amount due and then some.

This is just one example in a myriad of lending standards that lack any sort of common sense. Housing depends on the self employed to be able to obtain credit. Yet alas, we won’t give a loan to a person that creates JOBS, yet we’ll give a 97% loan to a person with a poor credit score, with no money in the bank, and we’ll guarantee that loan with taxpayer money. This is offered by the FHA – your new sub prime lender folks.

Conclusions here? Not only is the government killing housing with its policies, it is creating yet more dependency on the system by the folks who can’t afford a home and rightfully shouldn’t be enabled to buy one.

But isn’t this the point of it all? Make the people dependent on you and they’ll bow down to you.

Think about it……

Think about something simple like food. It sits on the shelf, conveniently available at your local grocer. All you need to do is put it in the cart and check it out at the counter. Such simple dependency can lead to disaster. Envision what would happen if the shelves were empty? Riots would ensue. People would be desperate – and easily succumb to any power that provides sustenance. The result = slavery.

The same is true for finances and our government. We’re so dependent on a system led by “the king” that we’ve come to rely on it for our sustenance without realizing what’s happened to us. It’s true – the government controls your finances and freedoms using the following tools:

• Taxation
• Spending (a form of taxation)
• The growing national debt
• Fiscal manipulation (better known as the Federal Reserve’s monetary policy

This dependency has led many to believe that raising taxes is the answer to our woes (sold to the people in a manner that demonizes those viewed as stingy, wealthy people). This is a ridiculous assertion that flies in the face of historical fact – tax cuts raise federal revenues as a result of greatly multiplied economic activity. Tax cuts provide a return on investment – the type of investment that provides freedom.

Are you enslaved? Think about it before you decide who you are going to trust.

Why? Because you could have saved the money for retirement – and still get a refund. Check out my example:

Instead of getting $2,200 back (that’s about average these days) and spending it, you decide to put it work for retirement.

Magic! You’ll still have a refund of $770, because you don’t have t0 count the money you contribute to your retirement as income.

It’s a Scam

This stuff drives me crazy, folks. The government purposely overwithholds your money so they can borrow it for free and refund it later in the hope that you will spend the cash windfall. They are both stripping you of savings and injecting your money into the economy (that is, if you cooperate).

This is nothing more than manipulation of the masses – and a financial scam to boot.

Don’t Make Excuses

Some tell me they love the refund because it’s “forced saving”. That’s bull. You can save and you don’t need the government to help you.

It takes a lifetime for most to pay off their mortgage. And while many consumers are swimming in debt, the United States government seems hell bent on drowning in it. And taking the rest of us down the drain.

President Obama plans to raise taxes on those most likely to create more jobs. And those more likely to put a little dent in the 31,00 payoff horizon. An expanding economy creates more tax revenue. Beating people with the tax hammer in the midst of a terrible economy won’t solve the long term problem! At and average lifespan of 70, it would take 450 generations to wipe out the debt.

In the words of many, this is a spending problem – not a revenue problem. If you own a business, you can’t force people to buy your product. You must become more efficient. The Government has the luxury of forcing it’s constituency to buy its product by raising taxes. Do you like that?

There’s only one real solution – dramatically cut the size of government, kick the government workers and politicians out on the street and let them compete for jobs provided by those that know what the heck they are doing.

Why is this? It’s due to a leadership crisis – the lack thereof. The financial crisis is a given – leadership isn’t.

If we want to cure the recession, we need to elect a leader – not a politician – to the highest office in the land. I can’t remember the last time we’ve done this, so don’t get your feathers ruffled if you think this is about Barrack Obama.

Here’s the kind of leadership that will cure the recession:

• Tell it like it is - this isn’t a popularity contest. We’re in a mess and virtually everyone has screwed up. Including Mr. Over-leveraged Consumer. It’s going to be painful – but better now than to pass the pain to our children.
• Come in with guns blazing – no allegiances to anything other than balancing the budget. A single focus!
• Cut your benefits – Quit lining your pockets at our expense. This means the President, the Vice President, the House and the Senate (at the very least) drop their pensions and health care and get on the same system as the rest of us. Little things count too – no $250,000 white house personal residence makeovers.
• Be one of us – Don’t even start to talk about what the people need to do until you do it first.
• Quit blaming others – this doesn’t fix a thing (If anyone should be criticized, let’s look at the Presidency and Congress, which have stolen money from the social security fund for decades). See my post: http://mindyourownmortgage.com/blog/2010/10/the-social-security-scam-part-1/
• Aggressively cut the size of Government – We don’t need it! It it means government jobs are lost – so be it. Join the club…..

The real question is this:

Do “We the People” want to face the truth about what’s needed? If we do, then we’ll elect a leader instead of a politician. If we don’t – well – expect more the same crap from our government.

You get what you vote for.

Sounds insane – but go with it for a moment and let me prove it to you.

There are three habits that seem of little consequence, but in the long run will cost you dearly. Here they are:

• The daily Starbucks fix
• Buying lunch
• Drinking bottled water

Assume you ditch these habits in favor of flipping the switch on your coffee pot, brown bagging it and filling a reusable plastic bottle with your own water. Do the math and you’ll find as much as $250 – maybe even more (depending on whether you favor the caramel machiatto over a drip with room). Now assume you dump this found money into your mortgage.

In this example, I’ve taken a 5% fixed rate mortgage that our recovering Starbucks addict took out in January 2010. I plugged the numbers into our Mortgage Minder Dashboard (which is available for free, by the way). Kicking all three habits knocked 69 payments off of the mortgage:

If your goal is to be mortgage free at some point in life, even better news awaits. Check out the screen shot taken from this example. This 40 year old wouldn’t have paid off his mortgage until just before he turned 70, but now he’s done by 63. And he’s added $150,000 of cash to his retirement years because he won’t have a mortgage payment anymore:

It’s amazing how the little things in your financial life can secretly steal your retirement dreams. Making a few simple changes today will provide a big payoff later.

PS – Go to our website at www.mindyourownmortgage.com, sign up for our free membership and plug in your numbers. See how much you can save!

Here is the Last Part in the Series “Restoring America”.

You can’t make a difference without being different. The road to recovery is the one less traveled. When you’re on this road, you’re easy to spot. People want to pull you off of it and get you to cruise along with everyone else. Diverting your focus is the goal, and it will impede your progress towards your destination. You cannot allow distractions to become the detours that lead to dead ends. The pull of popular culture, voices of doubt, tempting shortcuts and discouraging delays will not doubt serve as pitfalls along the way. But if you and others stick to it, once folks realize the road less traveled leads to success, it will become a super highway.

You need to decide to be a maker – not a taker. A maker claims his destiny and goes after it with great zeal. He knows there is a plan for his life that is as unique as his thumbprint, and that his abilities and experiences are fused together to deliver him into the plan. Legislated redistribution of wealth and social justice isn’t going to cut it. If we could legislate good behavior and charity, the world would be free of its problems.

They say not much is America these days. It’s true. But great people are still made here. You were made here. America’s greatness lies in its people and the collective will to succeed. A financially sound country, made up of financially sound individuals, will allow us to reclaim our destiny as individuals and as a nation.

Enroll

Life is a school and problems are the curriculum. If you’re enrolled in life, then you have been accepted to the university of hard knocks. Graduation from higher education is subject to your ability to deal with whatever comes your way – whether on not its your fault.  You can make a difference, beginning in your own home. The power to determine our nation’s financial success is drawn from our knowledge and the ability to apply it to our lives, so it’s vitally important to educate our selves and the next generation.

The road to recovery requires you to stay in school. Don’t drop out – keep reading this blog.

Restoring America – Part V

Will you take hold of your financial destiny? Where will you be in ten years? Do you have a life plan that will get you there – in writing? Have you noticed that everything in life takes longer than you expect? It will take decades to correct what we’ve done to ourselves – so you need to make the next ten years count.

Set upon an unshakable foundation, we can individually and collectively rebuild this once great nation. Don’t fool yourself into believing America is still great. It’s not, we’re not and there is nothing wrong with admitting it. Resting on past success always leads to failure and ignoring history leads to repeated mistakes. Rebuilding implies what once stood has been torn down and we have set before us the task of constructing something new. The good news is that we don’t need to reinvent anything. The principles and the knowledge exist in our Founding Fathers vision and the blueprint to achieve it. That vision – despite the outcry of dissenting parties – was rooted in cooperating with God.

A fire destroys a home, but its foundation still stands. That’s because it’s made of rock instead of sand. Are you standing on the rock of our nation’s vision and the party in whom we claim trust?

Restoring America – Part IV

The decision to be rescued is made in a moment of time – although the events leading to the decision can take place over years, even decades. During and after the process of being rescued from a bad situation, we begin to see clearly what went wrong. Our eyes are opened to the financial blunders we made in our homes and nationally. We begin to see the cracks and weaknesses in the foundation of our lives.

Restoration begins by realizing our consumer and national debt is a foundation made of sand waiting for an earthquake. And if we spent beyond our means to get into debt, then spending to get out of it makes no sense at all.

But this is precisely what the government is doing and it wants you to follow along (recall that consumer spending accounts for 70% of the economy). Thomas Jefferson once said “The maxim of buying nothing without money in our pockets to pay for it would make of our country one of the happiest on earth”. For how long have we violated this maxim? Our national deficit has been skyrocketing for decades. We’ve had to tighten our belts and the government must to the same. Do you think Thomas Jefferson would approve of what we have allowed?

Restoration entails much more then getting out of debt. It’s a comprehensive effort that reaches into all aspects of your financial life. You need to learn how your life and your habits relate to your finances – and how to deal with problems, make corrections and manage things going forward. The problems in life aren’t the problems with life. Problems only reside in our responses to them. Therefore, the proper response is critical to restoration and is the foundation upon which we rebuild. Real problems are rooted in your perspective. We must ask ourselves what lessons are to be learned from our problems. How we can grow as a result. Whether or not we are resisting the changes necessary to make them go away. And then – we must act.

Failure comes from not recognizing that you must determine the solution to your problem. We want to blame someone else – business, the government – you name it. We start to feel sorry for ourselves. Left uncorrected, such feelings lead to resentment, bitterness and lasting pain. Today’s culture wants us to blame everyone other than ourselves. This is a path to nowhere, and it represents a serious predicament for society. Perhaps the problems we have today are God’s way of getting your attention. Are you going to shout back at him in blame – or are you going to have faith that he has a better plan? And maybe – just maybe –what we’re going through is protection from something that could have been much, much worse.

And so it is that we must lay a new foundation. We the people must become financially capable. Yet the government works hard to keep you from enrolling in the school of the financially literate. If you don’t, then you have to rely on them. And isn’t this what government spending is all about? Reliance? Government now accounts for almost 25% of the economy. The average American works until August 19^th to pay for all forms of government – 32 days longer than only a couple of years ago (footnotes pending). How is this possibly sustainable? How long will it be until the financially astute population becomes large enough to demand the change needed?

It’s been said people vote with their wallets. But this yields positive results only when one understands how to manage what’s in his wallet and assumes responsibility for it.

Restoring America – Part III

There are three steps to Restoring America. The first step is “The Rescue”.

If you’re drowning in raging river, it’s obvious you must be rescued. Often times, however, we’re in need of rescue and we don’t realize it. And the only person standing in the way is oneself. So it is with our finances, with which we have been deceived. By now we finally realize we’re stuck in a raging river and must find a way out.

In order to fix ourselves we must be rescued from ourselves. What? I’m part of the problem? You bet. To quote Ghandi – “you must be the change you want to see in the world”. Being rescued doesn’t mean the road to recovery is up to someone else. Leading and being led by example is the only way to accomplish recovery. The question is who is going to lead you.

Every time you spend a dollar, you hold the answer to this question in your hands. Our money is by no coincidence the source of our ills. Isn’t it interesting that the words “In God We Trust” are printed on each bill? Have we placed our faith in the almighty dollar instead of placing trust in someone we can trust?  Perhaps the words are printed on our currency because we are meant to look past our currency.

There’s a vicious war over money because the easiest way to gain power over people is to control the money supply. And if you control money, you might be able to shake the faith of the people and lead them to misplace it in you. Being rescued means understanding the powers, situations and circumstances that seek to deplete your wealth and how to combat them. You need to know who’s after it and how they plan to rip it out of your clenched fists or steal it when you aren’t paying attention.

As was once famously said, government is not the solution to our problems – government is the problem. We don’t need to reinvent government. We simply need to rescue our lost government by returning to the principles upon which this once great country was founded. The blueprint exists and it isn’t that hard to follow along. Are we one nation under God, or are we one nation under the Federal Government?

The health of our economy is determined in the trenches. It is the sum total of the individual decisions made in the American household. It is therefore within the will of the people to change the course and begin to restore America by rescuing America. Yet this will is only as strong as the conviction of the people and it must begin with our personal finances and in whom we place our trust.