Mortgages: How To Beat Financial Goblins

Mortgages shouldn’t be a big worry, but for a lot of Americans that hasn’t been the case during the past few weeks. The national government closed its doors from September 30th through October 16th. More than 800,000 federal workers were not paid as a result — but many, many more outside the government lost hours, income and opportunity because of the national shutdown. Even national cemeteries and the Grand Canyon were closed.

Think of the government shutdown as a warning shot. If federal workers do not have assured paychecks then who does?

It’s nice that some mortgage lenders have instantly offered forbearance to workers directly and indirectly impacted by the shutdown, but that’s not universally the case. And, it’s good, I guess, that mortgage rates have fallen since the start of the government shut-down and the near default on the national deficit.

Mortgages & Paychecks

If you live paycheck to paycheck then in time you will lose, the only question is when. You’ve got to protect your interests so here are five basic steps to take:

First, bulk up savings. It’s usually said that you should have the equivalent of six mortgage payments on hand and in cash. You need this cash not only for financial emergencies but also because things can change — what if you lose a job?

Second, you need a budget. How much do you spend each month? Where can costs be cut?

Third, re-think big costs. Do you need a new car or just a really good used car? The difference can mean thousands of dollars in savings. Take a very careful look at how CarMax sells and finances used cars before looking elsewhere.

Fourth, look at refinancing. Mortgages are now less expensive then before the federal shut-down and deficit debacle. Speak with lenders for details.

Fifth, the economy is changing. What skills do you have going forward? We now live in a world with downsizing, offshoring, outsourcing, smartsizing, rightsizing and a hundred other cutesy terms that mean we are losing jobs and income inside our borders. In fact, household income today is less than it was in 1999! Protect yourself. Look into the fields that are expanding and areas that are necessary and local such as car repair, nursing and plumbing.

It used to be that one person with a high school education could support a family. Then it took two people. Then you needed a college education. Now two people with college educations may well delay marriage, starting a family or buying a home because the national economy is so fragile.

Don’t be a victim. Save and be prepared for the tough economic times which lie ahead.

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