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With the current housing and credit crisis more and more people are finding that their homes are worth much less than they owe on their mortgage. I too own 2 homes and my main home that I purchased in 2003 is also worth less than it was worth in 2006 and also it almost getting to be the same value that I paid for it.  Now my other house that was supposed to be a super investment is now worth over 100,000 less than what I owe the bank. That home was purchaced in late 2006 and that is the reason for its failure.

You see true home values probably hit a peak in either late 2003 or 2004. Then every price after that was based on a fake speculation and the prices were pushed up too high. The prices never could account for a purchaser to have a positive cash flow by renting it out. This is where all the banks went wrong. They should have realized it back then and this whole mess would never have happened.

This is something that all of the great real estate gurus always tell you. If you buy Real Estate, always make sure that the rent that you can get for it is enough to pay your mortgage each month, this also includes the escrow for taxes and insurance. But we all did not listen to this advice. We just went out and got those mortgages with those 1 percent teaser payment rates because our Real Estate agents assured us that we could flip it in 6 months or so. I still remember that smile on my agents face.

And then the flip that never happened. It was not possible anymore. By the time I closed on the sale of this pre-construction home, it was already worth $30,000 or $40,000 then what I had paid. The problem is that none of wanted to admit it. We did not want to admit that we screwed up. So we waited longer and longer and now we are so deep in debt to the bank that we have 2 choices left. One is foreclosure and the other is for us to wait 15 years until the 2003 prices increase 150 percent - at 10% a year. So forget about it. What is better? 2 years of bad credit or 15 years of misery?

Have you seen the latest 30 year Fixed rates? They are almost at 6.5 percent. The Fed rate is still at 2.0 but Banks are really taking major advantage of the difference. Also the Fed rate is going to be adjusted upwards in the next meetings, because of too much inflation. Meanwhile with housing values still declining and people that still have to pay taxes and insurance on homes that are not worth it. Homes that do not produce positive cash flow even when rented. Even I have one of those. At this point I think that we might as well just give them back to the greedy banks anyway. So I can definetly see more and more foreclosures on their way and I am also glad because I think the banks deserve it. Why did they give us these mortgages without appraisels? We are in a recession and we will be in it for a few more years to come. Meanwhile watch the 30 year fixed rates as they will keep rising, that is beacuse the banks are so greedy. So guess what if you were planing to refinance now, its too late. You missed the boat! Don’t do it unless your desperate. And good luck!

This is a question that I bet many people are wondering. Well the truth is yes to both parts. We are either in or close to being in a recession. But at the same time the stock market seems to be doing quiet well.  We are seeing more than 3 up days each and every week. This is amazing!

I have a friend who keeps complaining that he keep loosing money trading stocks. Well, his reason is that he loves to “Short stocks” which is basically a method of borrowing stocks for a higher price and then selling them back for a lower price, and you get to keep the difference. He thinks the market is about to go down, but it does not. So he ends up loosing money.

This is probably because the stock market buys on the news. What this means is that just because the news tells you that we are in a recession, the individual companies that make up the stock market are not, or if they are, they are not showing it yet.  Maybe the Bear Stearns deal is holding things together. But also there are the market makers who are able to keep the market up, as long as possible to keep us from falling into a more severe recession.  Maybe that is ok for them, but in some ways this is hurting us. A good stock market day usually gives banks an excuse to raise the mortgage rates and if they keep going up, that will really create a deeper recession. As I can see this is all a big game.  I think they are waiting for me to invest again and then they can take me for a roller coaster ride, like I did a few years ago.

Only the future will tell. But 2 things are almost for sure. These daily market rallies are either a temporary pattern that will soon fade, and then we will see a huge sell off. Or, If not we may just see a stale market for a long while.  

Just because I am Socialy Conservative, does not mean that I agree with the way that some people like to waste their money and show off.

I too can afford to drive a much larger car, but I choose not to. I drive a Toyota pickup truck and it does about 20 Miles to the gallon. I use it for the moving services and the rest of the time I drive a small Neon that does 30 MPG.

But I am getting sick and tired of seeing people waste money on gas, just because they are too insecure to be seen in a smaller fuel efficient car. If we continue to do this in the end we are only supporting the big gas companies and the nations that produce oil.
So on that note:
I really do wish and pray that gas prices keep rising until more people realize that driving big cars and SUV’s is stupid. These cars only create more traffic jams and road rage. These cars are ok for a family with 5 kids, but come-on, why do I see so many mothers that have only one kid, driving in big SUV’s. In the end if they don’t care about high gas prices, well then gas is still too cheap. This is why all of those Arab countries that support terrorism have so much money.
I can’t wait to see the day when we stop needing to buy oil from them. I hope gas makes it to over $5 a gallon! I’ll just drive a fuel-efficient car or hybrid. If you need to take a big car on a road trip, well then you can always rent one at the time.