Initially we were watching a lot of stuff through Netflix.  We are still watching a fair amount through Netflix but we are actually finding plenty to watch on just the 5 network channels by using our old Tivo.  We spent 30 minutes reprogramming the Tivo last week and we have a ton of stuff being recorded now.  I don’t anticipate we’ll ever run out of things to watch since we only watch about an hour of TV each night.

So, like I said earlier, we have no regrets and we are thrilled to be saving the extra money every month!  Apparently we aren’t alone.  Check out this article about 1 in 8 households being expected to cancel cable in the next year.

What got me to subscribe in the first place is that they’ve had some really good deals on things like Xbox’s, laptops and TV’s. I almost felt like I might be missing out if I didn’t subscribe. Do I need an Xbox, laptop or TV? No. I already have them but the psychology of missing out on an amazing deal pushed me over the edge and caused me to subscribe.

At this point, I’m not really seeing an upside to staying subscribed. The only foreseeable outcome to this is me spending money on things that I really don’t need. I may watch the stream for a few more days but I think ultimately I’m going to unsubscribe so that I won’t be tempted to frivolously spend!

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If only I could shake them a bit and get them to think about building an emergency fund and paying down some of their massive debt before they embark on a new quest of materialistic hedonism. Oh well, I guess someone has to stimulate this economy. Apparently the stress of selling off some of their assets and just barely scraping by hasn’t changed their overall view of “stuff”.

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I was just talking to my neighbor about this last week. I’ve mentioned him before. He bought the house across the street back in 2006 right at the peak of the market for a sales price of $440K. If he was to try and sell it today, he’d be lucky to get $315K. Fortunately, or unfortunately, he didn’t put much down on the house because he hadn’t sold his previous home. Instead he got two loans. One for 80% of the sales price and another for 20%. That put him at zero percent equity and it’s just gone down hill from there. To top it off, he lost his job about 9 months ago. He has stayed current on his mortgage but he’s taking a long hard look at how much longer he can do that. He also believes it’s okay to walk away, probably more out of necessity, than anything else.

From my viewpoint, the banks offered a loan against a piece of property. By holding the deed to the property they are, in effect, saying, “If you don’t pay this mortgage off, we are going to foreclose and take your house”. Now that it’s happening with increasing frequency (read: A LOT), there is all this talk about how it’s immoral to walk away. I don’t agree. The banks normally go to great lengths to loan to credit worthy individuals. That’s why they invented credit scores. It just so happens that they threw all those rules out the window during the real estate feeding frenzy of the mid 2000′s. It is due to their lack of prudence that they are now faced with taking back hundreds of thousands of homes (as their contracts state). Do I think they should be lowering loan amounts? Nope, not in most cases unless it’s to their benefit to do so. I think they should take the houses back and do their best to minimize their losses by selling the properties. Hopefully, if you are walking away from your home, you live in a state that doesn’t allow deficiency judgements. In these cases, you can’t just simply walk away. You could very well be billed the total loss that the bank takes on the property once they sell it. While there has been some press on this recently, apparently it doesn’t happen too often.

Anyway, in the end, I think that the banks made calculated risks with each of the loans they doled out. They are going to yield a positive return on some of the loans and they are going to lose on others. Don’t get me wrong, there is certainly some personal responsibility that is called for here. Personally, I think where morality comes in to play in all of this is where the people took out loans they knew they could not afford. It was at that point, that they made an immoral dishonest choice. At the same time, had the banks used their very old and very reliable guidelines for lending, these loans probably wouldn’t even have been approved in the first place. The folks that took out loans that they could afford but have since found themselves unemployed or underemployed and now can’t afford to pay their mortgages are really the ones that I completely sympathize with. They made a good faith effort to honor the loan, but now can’t. I don’t think they have a lot of choice other than to walk away, unless they have enough equity to actually sell the house and break even.

Let the flaming begin!

BEAUTIFUL M3
White exterior / Black leather interior
Dual clutch system
Technology Pkg.
Fully Loaded
Carbon Fiber Roof
Premium Sound System
Navigation
You can either buy it outright for $56,000 or
assume my lease of $1309.10 per month for
the remaining 20 months of the lease term.
Residual is approx. $36,000.00

Seriously? A monthly LEASE payment of $1309? Or you can buy it outright for $56K which is $4000 over invoice on a brand new one. I wonder if this guy is good with his money. I’ve never heard of a lease payment on a vehicle being that high.

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So, needless to say, I currently have the rental house “bug”. I’m seriously considering jumping in to the landlord business, although I certainly have some reservations. Here are a few of the things I’m considering:

-Stability of my employment
-Stability of the rental market in the area
-Hidden problems with potential properties
-Monthly costs to own a rental (which I need to be sure is covered in the rental rate)
-Types of renters at the bottom of the market

While I’ve recently learned that there will be what I’d call “massive” layoffs in the IT division of my company, I’ve also been told I shouldn’t be at risk at this point. That makes me feel a little better, but it’s hard to feel too good about my employment while people around me are experiencing the shock and stress of getting laid off. In theory, once I buy a place and get it rented out, I shouldn’t be quite as worried about my employment. The problem with this is that there are plenty of scenarios that could really be an issue if I lost my job. What if I end up with a renter that just stops paying the rent? It could be months before I could get them evicted. What if the house needs major repairs at some point and I can’t rent it out for an extended period of time? As long as I am employed, none of these scenarios would hurt us. I wouldn’t enjoy having to pay the mortgage on another house that wasn’t rented out, but I could swing it. If I ever lost my job and didn’t have a renter, it would hurt much more.

I’ve been doing a lot of reading about the rental market being weaker than it’s been in a long time. This might mean I’d have trouble finding a good quality renter and may find myself “bottom feeding” for sketchy renters. If that’s the case, it would also increase my risk of getting a renter that decides to quit paying his rent or trashes the house. I also might find myself with a vacant house for extended periods of time. Like I said above, this wouldn’t kill us as long as I’m employed.

While I’d like to think I’m pretty savvy from a real estate perspective, I also recognize that I’m probably much more ignorant about rentals and real estate than I realize. There are plenty of things that could go wrong when trying to find the right rental. The only comfort that I have with this is that I’ve owned a few houses and have a pretty good eye for potential issues. I also have a “best friend” who is a contractor and would be happy to look at any potential place for me. I think having issues with a rental is a manageable risk.

I also need to realize that there are plenty of costs that I need to consider when deciding whether I should buy a potential rental. I need to identify the total taxes I’ll be facing, insurance costs, total mortgage costs including principal and interest, any neighborhood association costs, and I should also make sure that there are no outstanding assessments against the property for things like sewers or water systems. All these things will help me understand the total monthly costs of owning the place. If comparable rents in the area aren’t yielding that amount, I probably wouldn’t buy it. In the past I’ve thought maybe I’d buy a rental, even if it was slightly cash flow negative, but I’ve decided that if I can’t at least be cash flow even every month, I don’t want to go down the landlord path.

I mentioned above that I need to be concerned with the type and caliber of renter I might be able to get. If the rental market was red hot, I might be able to get some pretty good quality renters but with the rental market being weak now, I have to come to terms with the fact that I won’t be able to be as picky as I might like. When trying to rent out a lower end house, I have to prepare myself for dealing with more rental drama than if I was trying to rent a “middle of the market” type property.

Even with all these things to consider, the idea of someone else paying the mortgage on a property I own is still very tempting. I’m going to be watching the housing market in my area very aggressively for a potential property. At the same time, we are continuing to save as much as we can. If the stars align, I may just end up buying an investment property.

Well, now I don’t need to worry about it any more. I can now deposit checks from the comfort of my own home. What does it take?

Basically, you just need a scanner and Internet access. That’s about it. You keep the check and your money is available (with some restrictions) immediately. All you do is scan the front and back of the check that you want to deposit, enter in the deposit amount and that’s it!

A company called “Fiserv” is behind many of the credit unions that are now rolling out this service. I’m not sure when the big commercial banks will be on board with this new feature, although I do know that USAA offers online deposits. Does your bank or credit union offer online deposits? If so, let us know who it is!

Talk about good luck followed immediately by bad luck.

Anyway, go check out Bek’s point of view on banks and see what she has to say. It’s a great blog and definitely worth your time to check out! She may even invite you to a summer BBQ.