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7 steps to becoming debt-free in '07

7 steps to becoming debt-free in '07

The Debt Adviser by Steve Bucci • Bankrate.com

If one of your New Year's resolutions is to get closer to becoming debt-free, this column is for you.

Steering clear of unwanted debt is a great way to manage your finances and relieve daily stress, which seems to become increasingly more stressful each year.

1. Live below your means. You cannot become debt-free if you spend more than you earn. It's that simple! Financial stress relief is called "money in the bank" or "positive cash flow."

2. Decide where you want to spend your money. Don't let others decide for you. Know how much money you are bringing in, how much goes out and to where it goes. If you are not satisfied with the answers you get from this exercise, now is the time to change your spending habits. You (and your significant other) are ultimately responsible for how your money is spent.

3. Pay your bills on time, every time. Managing monthly bills is an essential part of staying debt free and maintaining a good credit rating. If you find this difficult, come up with a system to ensure that bills are not paid late.

4. Set financial goals, both short- and long-term. Having goals in place makes it easier to make the necessary spending cuts to get what you really want. Without reasons to cut spending and save, you will constantly be under pressure to spend money you don't have for things you don't need.

5. Use credit only as a tool and with a plan. Figure out how and when you will pay the balance. Imagine building a house without a plan or blueprints. That's what your financial house will look like, too, without a plan. Your goal should be to pay for credit card purchases within three months. Remember, unlike wine, cheese or my wife, debts do not improve with age.

6. Have an adequate emergency savings fund. Life will throw curveballs at you, ranging from the need to replace a worn-out washing machine to a temporary job loss. Three to six months' worth of bare-bones living expenses should shield you from most of these problems. Can't do three months' worth? Start with three days' worth and watch it grow as saving becomes a habit.

7. Learn how to invest your savings. Your money has to earn more money to keep you out of debt, especially in your later years. Take a class, find a referral to a great adviser or just start reading. Do it your way, but do it; and start now!

So there it is, my seven for '07. May you have a debt-free New Year!

The Debt Adviser, Steve Bucci, is the president of Money Management International Financial Education Foundation and the author of "Credit Repair Kit for Dummies." Visit MMI for additional debt advice or to ask a question of the Debt Adviser, go to the "Ask the Experts" page and select "debt" as the topic.

U.S. home-ownership rate holds steady in Q4

U.S. home-ownership rate holds steady in Q4 - Rate highest among those aged 65 and up

Tuesday, January 30, 2007

Inman News

The national home-ownership rate remained roughly flat at 68.9 percent in the fourth quarter, compared with 69 percent in third-quarter 2006 and in fourth-quarter 2005, the U.S. Census Bureau reported this week.

The rate was 64.5 percent in the West, 65.3 percent in the Northeast, 70.8 percent in the South and 73 percent in the Midwest. The rate in the West dropped from 65.3 percent in the third quarter but was comparable to the fourth-quarter-2005 rate of 64.6 percent.

The home-ownership rate was 81.2 percent for those aged 65 and up, 80.7 percent for those 55-64, 76.4 percent for those 45-54, 68.9 percent for those 35-44, and 42.8 percent for those under 35, the Census Bureau reported. These rates remained roughly flat compared to rates in the third quarter.

The rate of home ownership rose from 80.6 percent for those 65 and up in fourth-quarter 2005 while falling from 69.7 percent for those 35-44, and also dropped from 76.7 percent for those 45-54 and from 43.1 percent for those under 35. In fourth-quarter 2005, the home-ownership rate was the same for those 55-64 and those 65 and up.

Among racial categories, the home-ownership rate for "non-Hispanic white" householders reporting a single race was highest at 76 percent. "All other races" householders was next at 60 percent, and "single-race black" householders was lowest with a rate of 48.2 percent, according to the report, and home-ownership rates for each racial category were statistically unchanged from their respective rates last year.

The rate for Hispanic householders (who can be of any race) at 49.5 percent was not statistically different from last year's rate.

National vacancy rates in fourth-quarter 2006 were about 9.8 percent for rental housing, compared with a vacancy rate of 9.6 percent in fourth-quarter 2005 and 9.9 percent in third-quarter 2006. And the national vacancy rate was 2.7 percent for homeowner housing, compared with 2 percent in fourth-quarter 2005 and 2.5 percent in third-quarter 2006.

For rental housing by area, the fourth-quarter-2006 vacancy rate was 9.5 percent in the suburbs, 10.1 percent in principal cities and 9.7 percent outside metro areas. "In the suburbs and outside (metropolitan statistical areas) there were no statistically measurable changes in the respective rental vacancy rates from a year ago, while the rate inside principal cities was higher than last year."

The homeowner vacancy rate in principal cities, at 3.6 percent, was higher than the 2.4 percent rate in the suburbs and 2.3 percent rate outside metro areas. When compared to a year ago, the homeowner vacancy rates inside principal cities and in the suburbs were higher, while the rate outside metropolitan statistical areas was not statistically different, the Census Bureau reported.

Among regions, the rental vacancy rates for the current quarter were highest in the South at 12.4 percent and the Midwest at 11.9 percent. The rate was lowest in the Northeast at 6.5 percent and the West at 7 percent. The rental vacancy rates in each region were not statistically different from their respective rates last year.

Regional homeowner vacancy rates for fourth-quarter 2006 were highest in the Midwest at 2.9 percent and the South at 3 percent and were lowest in the West at 2.4 percent and the Northeast at 2 percent. The homeowner vacancy rates in each region were higher than their respective rates a year ago, according to the report.

There were an estimated 126.7 million housing units in the United States in fourth-quarter 2006, compared with 124.5 million in fourth-quarter 2005. About 109.9 million housing units were occupied (75.8 million by owners and 34.2 million by renters) -- in the fourth quarter, compared with 108.9 million occupied in fourth-quarter 2005 (75.2 million by owners and 33.7 million by renters).

Of the 16.7 million vacant housing units, 12.7 million were for year-round use. About 3.8 million of the year-round vacant units were for rent, 2.1 million were for sale only, and the remaining 6.8 million units were vacant for a variety of other reasons, according to the report.

When adjusted for seasonal variation, the fourth-quarter home-ownership rate was 68.7 percent, which is not statistically different from last year's seasonally adjusted rate of 68.8 percent and the third-quarter-2005 rate of 68.9 percent, the Census Bureau noted.

In fourth-quarter 2006 the home-ownership rates for households with family incomes greater than or equal to the median family income, at 84.5 percent, and for those with family incomes less than the median family income, at 52.9 percent, were not statistically different from their respective rates last year, according to the report.

The estimates in this Census report are based on a sample survey and are subject to sampling and nonsampling error -- sampling error is a result of not surveying the entire population, and nonsampling error occurs because accurate information cannot always be obtained, the Census Bureau reported.

The rental vacancy rate is the proportion of the rental inventory that is vacant for rent, and the homeowner vacancy rate is the proportion of the homeowner inventory that is vacant for sale. The home-ownership rate is the proportion of households that is owner-occupied -- it is computed by dividing the number of households that are occupied by owners by the total number of occupied households.

***

Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

Copyright 2007 Inman News

Fannie Mae Economist: Downturn's End Near

Daily Real Estate News January 18, 2007

Fannie Mae Economist: Downturn's End Near

David Berson, the chief economist at Fannie Mae, predicted at a news conference Tuesday: “By the middle of ‘07, we think most of the decline in investor activity will be behind us. That suggests the downturn in housing should end around midyear.”Berson says he expects home sales to drop by as much as 8 percent this year compared with 18 percent in 2006. By mid-year, Berson also believes the inventory of unsold homes “should be significantly lower than where they are now.” The stock of unsold existing homes has hovered around a 7.3-month supply since July.

Source: Reuters News (01/17/07)

7 Easy Steps to an Early Tax Refund

7 Easy Steps to an Early Tax Refund

By Jeff Schnepper

RISMEDIA, Jan. 23, 2007-The sooner you get your money back from the IRS, the better, so start now. Get your taxes done faster and more accurately with these steps.Here are Schnepper's Seven Strategies to getting those dollars in your pockets ASAP.

Here's what you have to do:

1. Get started
The first step is the hardest. Stop thinking about it and get moving. Until you actually start your return, you'll never finish it. That's probably going to slow down your refund.If you don't have all your numbers, just put your name and address on the form. It will get you in the mindset to move forward. Your first step is to break the inertia.

2. Accumulate the data
January is Collection Month. By the end of the month, you should have the numbers in hand. Make sure you've gotten W-2s and any statements from your brokers and banks. You'll receive 1099 forms for any interest, dividends, and sales of stock. Your mortgage company will send you a Form 1098 for any interest and real-estate taxes paid. Get those statements together and review the numbers. They're not always right.

3. Put the numbers in IRS categories
Neither the IRS nor your CPA is going to add up those numbers for you. Well, maybe your CPA. Several years ago, a psychiatrist on the Main Line near Philadelphia paid me $150 an hour to open his mail because he couldn't be bothered. In any case, don't even suggest it to the IRS.

You're going to want to have totals for the income and deduction categories the IRS provides. You'll need that final "number" if you're doing your own return, whether by hand or by computer. If you're having your return prepared, you'll want to give that number to your CPA to minimize his or her bill.

I suggest my clients use what I call the "envelope" system. You create an envelope for each of the IRS income/deduction categories. There'll be an envelope for medical expenses, charitable contributions, job expenses, interest paid, etc. Find all the receipts, all the checks, all the invoices and put them in the appropriate envelope. If you live in a state without an income tax, don't forget to look for numbers for a possible deduction of sales taxes.

These states are: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

In December, Congress extended a number of tax breaks including the sales tax and college expense deductions, as well as increasing the tax-free contribution limits to health savings accounts.

You can use this simple system all year. Throw all of your receipts into a file or even a shoe box. When you reconcile your checking account, on a monthly or at least a quarterly basis, you break down the checks and receipts according to the categories you selected.

By the end of January, you should have all your checks and receipts broken down in each envelope by deduction category. You add up the receipts and checks (don't double count!), and that's the number you use on your return or give to your preparer. That's how much you've spent in each deduction category. And, with this system, you never have to fear an audit.

An audit is nothing more than the IRS asking you to prove the numbers you put on your return. You've already done that. Just hand over the deduction-category envelope with the receipts and checks. After a series of matches, it's going to be a quick audit.

4. Analyze the numbers
Sometimes, the raw numbers you have are going to be wrong. On the income side, you're required to report any and all interest and dividends received, even if you don't receive a Form 1099. You'll have to match up the sales of stock with the cost of those shares. The number shown by your broker on Form 1099 B is only the sale price. You're not taxed on 100% of that number. You reduce it, on Schedule D of your return, by your cost, including broker's fees. You're only taxed on the net profit. If you don't sell 100% of your position, you'll have to allocate your costs on a per-share basis.

On the deduction side, you may have deductions not reflected by the raw data. Say you made your Jan. 1, 2007, mortgage payment on Dec. 31, 2006. The interest you paid won't be reflected on the Form 1098 sent by your mortgage company. That's because they didn't get the check until 2007.

But it's a 2006 deduction, and you should run an amortization schedule to compute the additional interest. That additional interest would be shown on line 11 of your Schedule A.

5. Call your accountant
If you're going to have your return professionally prepared, call your accountant now for an appointment. I know, you're her favorite client. But if you want an appointment tomorrow, you better call her yesterday.

In any case, once you've made that appointment, you've made a commitment to get that return done. And that means you've committed to get ready yourself. Just make sure you've got the numbers in order when you show up. Your wallet will appreciate it.

6. Put ink to paper
Or, at least, open the tax program on your computer. You've got your numbers. If you're doing your own return, put ink to paper. Go to your quiet place and actually do your return.

You've done the real work. Now you're just putting numbers in boxes. Relax; this is really the easy part. Remember, we started with how to get your refund faster.

7. Mail your return
A completed return on your desk that calls for a refund is the IRS' idea of heaven. It's your money. Don't leave it with the IRS. It's bad enough that they've held it all year without paying you any interest on your excess payment. Don't compound the pain by delaying the mailing.

Of course, the best way to speed up your return is to e-file. The IRS appreciates the cost savings and claims it expedites your refund. The IRS is offering what it bills as a free e-filing service. It's not quite free. You may still have to pay a "transmitter" to convert your return into IRS code and send it on.

In either case, electing a direct deposit of your refund will always get it into your hands faster than snail mail. More than 53 million taxpayers used direct deposit for their 2005 refunds, up from 49 million a year earlier.

Complete lines 73(b), (c), and (d) of your Form 1040, and, coupled with an e-filed return, in theory you could have your refund in your bank account in as little as 24 hours.

Alternately, the IRS now has a Web tool called "Where's My Refund?" that can tell you whether the IRS received your return and whether your refund was processed and sent to you.

For more information, visit http://www.irs.gov/individuals/article/0,,id=96596,00.html or call 1-800-829-1954.

SOURCE: MSN.com

10 Tips for Pet-Owning Sellers

Daily Real Estate News December 29, 2006

10 Tips for Pet-Owning Sellers

Pet-owning sellers may turn off potential buyers if they don’t keep Fido or Fifi out-of-sight during showings.

"If a dog or cat is around during a showing, I've found that a buyer either freaks out because they're afraid of or allergic to animals, or they fall in love with the pet and don't pay attention to the house," says Maria Rovegno, a broker with Prudential Douglas Elliman in Port Washington on New York’s Long Island.

Here is a list of advice for sellers when showing a house that has a pet:

1. Remove photos of pets from the walls, shelves, or refrigerators.

2. Clean food and water bowls regularly, and hide them when not in use.

3. Stash away pet toys, crates, carriers, and leashes.

4. Vacuum carpets, upholstery, and wood floors.

5. Keep litter boxes clean and out of sight, and remove signs of doggy potty pads.

6. Open windows to let in fresh air.

7. Neutralize odors with fresh-smelling candles and air sanitizers.

8. Hire professionals to remove unsightly pet stains.

9. Board or crate animals during open houses.

10. Repair visible signs of pet damage, such as scratched walls or floors.

Source: Newsday, Aimee Fitzpatrick Martin (12/29/06)

Existing-Home Sales Rise Again

Daily Real Estate News (Originally Published) December 28, 2006

Existing-Home Sales Rise Again

Existing-home sales continued to recover last month following a rise in October, with the level of sales activity suggesting a turn in the market, according to the NATIONAL ASSOCIATION OF REALTORS®.

Total existing-home sales — including single-family, townhomes, condominiums, and co-ops — rose 0.6 percent to a seasonally adjusted annual rate of 6.28 million units in November, up from 6.24 million the previous month. However, that still falls 10.7 percent below the 7.03 million-unit pace in November 2005.

“As the housing market recovers from its correction, existing-home sales should be rising gradually during 2007," says David Lereah, NAR's chief economist. "It looks like we may have reached the low point for the current cycle in September. We’ve entered a more sustainable period of home sales now, and we expect greater support for prices over time as inventory levels are eventually drawn down.

”Total housing inventory levels fell 1 percent at the end of November to 3.82 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace.

Window Opens for Buyers

The national median existing-home price for all housing types was $218,000 in November — which is 3.1 percent lower than November 2005 when the median price was $225,000. The median is a typical market price where half of the homes sold for more and half sold for less.

“For every 1 percent drop in home prices, we project an additional 50,000 buyers are drawn into the market,” Lereah says.

According to Freddie Mac, the national average commitment rate for a 30-year, fixed-rate mortgage was 6.24 percent in November, down from 6.36 percent in October; the rate was 6.33 percent in November 2005.

“Mortgage interest rates are the lowest they’ve been since January, and it’s the first time since August of 2005 that interest rates are lower than a year earlier,” says NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt. “This is increasing buying power at the same time that sellers are showing a willingness to negotiate price and terms. Combined with a plentiful supply of homes on the market, there’s a window for buyers now with conditions that we haven’t seen prior to the beginning of the housing boom in 2001.

”Single-family home sales increased 0.2 percent to a seasonally adjusted annual rate of 5.52 million in November from a pace of 5.51 million in October, but were 10.2 percent lower than the 6.15 million-unit level in November 2005. The median existing single-family home price was $217,200 in November, which is 3.6 percent lower than a year ago.

Existing condominium and cooperative housing sales rose 3.1 percent to a seasonally adjusted annual rate of 757,000 units in November from a downwardly revised 734,000 in October. They were 13.6 percent below the 876,000-unit pace in November 2005. The median existing condo price was $224,600 in November, which is unchanged from a year ago.

What's Happening Regionally

NAR reports the following changes in regional markets:

* Existing-home sales in the Northeast increased 6 percent to a level of 1.06 million in November, but were 4.5 percent below November 2005. The median existing-home price in the Northeast was $269,000, down 2.2 percent from a year earlier.

* Existing-home sales in the West rose 0.8 percent to an annual pace of 1.32 million in November, but were 17.5 percent lower than a year earlier. The median price in the West was $351,000, down 0.8 percent from November 2005.

* Existing-home sales in the Midwest were unchanged in November, holding at a level of 1.42 million, but 9.6 percent lower than November 2005. The median price in the Midwest was $165,000, which is 3.5 percent below a year ago.

* Existing-home sales in the South fell 1.6 percent to an annual sales rate of 2.47 million in November — 10.2 percent below a year ago. The median price in the South was $179,000, down 3.2 percent from November 2005.

— REALTOR® Magazine Online

Fewer Sellers Go FSBO in Slow Market

When the housing market slows, sellers know it can be a lot tougher to turn their property into a buyer magnet. With more homes on the market and increased pressure on pricing, buyers have more power in the process.

For-sale-by-owner transaction have fallen over the past decade to 12 percent of all sales today from 18 percent in 1997, says the NATIONAL ASSOCIATION OF REALTORS®.

NAR spokesman Walter Molony says sellers believe real estate practitioners are better equipped to achieve fast sales at top dollar in a weak market, adding that the median price for agent-assisted transactions was about 16 percent higher than FSBO sales last year. Practitioners orchestrate showings, handle paperwork, and identify serious buyers for sellers, Moloney says.

NAR's 2006 Profile of Home Buyers and Sellers shows that 5 percent of sales from mid-2005 to mid-2006 involved FSBO sellers turning to a real estate professional, with only 1 percent of sales involving sellers who abandoned their practitioner to go it alone.

Source: Investor's Business Daily, Brad Kelly (01/19/07)

Is Renting Smart When the Home Won't Sell?

Home owners who can’t sell their homes for what they think they're worth might find that renting buys them enough time for the market to rise.

But whether renting makes sense depends on various factors. Here are three questions to consider:

1. Do they need the cash? Sellers who can qualify for another mortgage without selling their current property are good candidates to be landlords. Lenders usually count 75 percent of the rent payments as income as long as the home owner finds a renter who will sign at least a one-year lease.

2. Can they rent the property for enough money? Major expense will include the cost of the mortgage, taxes, insurance, and repair bills. The cost of advertising and vetting tenants or of hiring a property manager can add another 10 percent of the rental cost or more.

3. Will they still meet tax exclusion requirements? Sellers who lived in a home for two years out of the previous five can exclude $250,000 of profit if they are single or $500,000 if they file jointly. If renting the property will preclude that, it may not be a good deal.

Source: Kiplinger’s Personal Finance Magazine, Patricia Mertz Esswein (02/01/07)