You just loaned the federal government $2165 for the bailout package.

G.W. Bush and his administration have in 8 years taken us from a budget surplus at the conclusion of Bill Clintons' term to a multi-TRILLION dollar budget deficit. How exactly did this occur? Well, everyone knows about the Iraq costs- $400 million PER DAY for six years now. Added to this fracas is the recently publicized $700 billion bailout package. The crux of the matter with the mortgage meltdown, which started this entire crises, is that it was entirely engineered by the Bush administration. While they probably didn't set out to destroy this country's economy their repealing of bank legislation and regulation set the stage for everyone to jump on the subprime bandwagon and write the most ludacrious loans imaginable then package them and sell them to Bear Stearns, Goldman Sachs, Freddie Mac, Fannie Mae etc. Many of these loan packages had bond insurance underwritten by AIG-another $85 billion bailout. In a capitalistic system, greed left unchecked will inevitably eat itself and that is exactly what was allowed to happen under Bush's horrid regime, just like it was allowed to happen under Reagan with the SnL crashes. That recovery will look like a drop in the bucket compared to the nightmare of this $700 BILLION disaster. That is $2165 in debt from every man, woman and child in this country. Even Sarah Palin's newest illegitimate family addition will be on the hook for this. Maybe she can pay in Moose hides.

In all seriousness, the U.S. is perfectly enginering it's own demise, and quickly. I for one am disgusted by it all.

Withdraw $$$ from 401(k) VS. Going into foreclosure

This article is from Robert Ashby, an all around good guy. During my work in foreclosure prevention this question has been asked to me several times and my standard answer is no-it is not advisable to use your retirement money to keep a sinking house afloat. This answer depends on the individual's situation of course, but I generally regard it as throwing good money after bad. Mr. Ashby goes into detail here. As always, if you are in some level of foreclosure you can reach me at Operation HOPE for no-cost foreclosure counseling




Many Americans are finding themselves facing potential foreclosure and lack any reasonable means to tap into money besides their 401k funds. That presents a major dilemma, not just for current finances, but for the long-term financial picture as well. Rather than debate whether or not these homeowners should have even been in the house in the first place, let’s just look at the choices they have remaining, neither of which are good.

On the one hand, they can just stop making those mortgage payments and set whatever money aside in preparation for the inevitable foreclosure. Believe it or not, this may make more sense than their other option. While foreclosure is not a good outcome, their finances may not be totally destroyed in the process. They may even keep enough liquidity in their control so they can survive in the longer term.

In many states, such as Florida, foreclosures take a long time and if the homeowner is able to live mortgage free during that time, they can accrue a reasonable savings instead of robbing their retirement and facing the other issues associated with doing that. In the long-term, they may actually be better off financially.

They other option presented here is that they can withdraw money from their 401k plan to pay for the mortgage. This is a bad decision on numerous counts.

For starters, there are penalties for taking the money out prior to age 59 1/2. Then you still have to pay taxes on the withdrawals and that withdrawal could even send you into a higher tax bracket as well. So, while you may be taking out some money, you could be left with considerably less, maybe even less than half, of that amount for paying off your mortgage. If you do use it all for your mortgage, Uncle Sam may be knocking at your door in the near future and that will not be a good meeting.

Another problem with withdrawing from your 401k is that you are robbing from your retirement funds, robbing yourself to pay the bank. The time value of money shows that you will have to work much harder in the future, even just 5 years down the road, in order to undo what you have done.

Yet another problem with the 401k solution is whether or not you are simply delaying the inevitable. If you are not in a position to sell the property or refinance quickly, you may be throwing good money after bad and simply “wasting” it away.

Don’t get me wrong, I am not condoning walking away from your obligations, but rather showing you of these two choices, you need to really think about their consequences and look at the long term picture, not just current reality.

There also may be other options you have not thought of yet. Make sure you are thinking clearly and not during a “panicky” state or you will likely make the wrong choices. Clear minds and a thorough thought process are required to make the best decision(s) for you and your family.

I am sure that many of you have something to say about this topic, so please chime in.

Fannie/Freddie Bailout lowers rates

Hello all, as some of you may or may not know Fannie Mae and Freddie Mac have been taken over by the government as of last weekend. This is the latest in a series of unconcionable actions by the feds bailing out massively flawed financial institutions and devaluing our currency and our country. Essentially what the government is doing is telling these institutions that they do not need to be accountable for their titanic screw-ups and torpid decision making, they can just fall back on tax payer money to cover the tough parts. At the forefront of the public fleecing is Daniel "my name is" Mudd-the ousted CEO of Fannie Mae who is receiving $24 million in severance pay on his way out. http://news.yahoo.com/s/nm/20080909/pl_nm/fannie_freddie_pay_congress_dc. "Here you go, you completely failed in your duties as CEO-we'll use tax payer money to reward you for doing a manure-laden job!" ARRRGGGHHHH!!! WTF with this cronyism?

There is an upside to all of this. Mortgage rates have plummeted this week to about 5.5 on a 30 year fixed down from about a 6.25%. I recommend everyone that has a rate above 5.75% to evaluate refinancing so some good can come of all this hoopla.