Seven Steps to a Responsible Financial Game Plan

Of the 11 million homeowners who owe more on their homes than the home is worth, approximately 6.5 million have never missed a payment reported Dale Westhoff of Credit Suisse Group AG.

Meanwhile subprime borrowers who received mortgage modifications (like reduced payments of more than 40%) in 2010 had a payment default rate of 19% after only 12 months, said Laurie Goodman, an analyst at Amherst Securities Group LP.

It seems backwards.

Those who receive aid should be the ones making their payments on time; after all halving a mortgage payment is a significant benefit (one the government can’t really afford).  Those who are “upside down” on their homes with a huge mortgage payment should be the ones defaulting.

But that’s not the case.

It demonstrates the importance of responsibility and sound financial advice.  For those taking on the responsibility of making their mortgage payment a priority (at whatever personal sacrifice) we see responsibility at its finest.  I applaud these people: they arguably made a mistake, but are willing to deal with the consequences appropriately.

For those with aid who continue to default on their mortgage something is clearly wrong.  Their irresponsible choices like the purchase of an expensive home, the amount of debt needed to purchase that home, and doing it all without a back-up plan put them in a really tight spot.  I hate that spot, and I do everything in my power to keep people out of it.

That’s why we believe in a clear game plan and sound advice.  Everyone might be in a better spot if they consult a financial advisor before their decision to take loan or make a big purchase.

It really boils down to simple steps we believe anyone can follow.

•  Build a budget and stick to it.
•  Set aside an emergency account
•  Set aside a “project” account for special expenses like a new car or Christmas
•  Use debt responsibility and always work toward being debt–‐free
•  Diversify
•  Invest in quality
•  Find a career you truly enjoy and help people acquire what they want and need

For those who need a little more help we’re always a phone call away.