Welcome to your eleventh installment of " Home Mortgage Secrets Revealed!"
essential reading for Homebuyers, Refinancers and Renters!

This 12 issue newsletter focuses on ways to get the most out of your home, by giving current and timeless advice on refinancing, buying your first home and how to avoid common mistakes made by homeowners, wannabe homeowners and renters. So whether you are buying, refinancing or thinking about either, every issue covers a topic that will help you no matter what stage of homeownership you are in.

ISSUE 11

The Truth About Debt

Facts about you and your m0ney

The average American will SPEND 1.8 million on goods and services in his or her lifetime. - American Demographics

A baby-boomer who makes $50,000 a year today will need 0NE MILLI0N D0LLARS in savings to replace that income by the time he or she retires. - USA Today

The average cost of owning and operating a car over the course of a person's working life is estimated to be more than $200k - American Institute for Economic Research

If the above costs of owning a car were cut in half (in other words each car was kept twice as long before replacement), the savings invested at 10% over the same person's working life would build up to an additional 1.3 million in retirement income!

An extra pmt per month of $100 applied to a 9%, 30-year fixed $100k m0rtgage will reduce interested by $75,394.

Adding just 15% to your monthly m0rtgage pmt can cut 10 to 15 years off the average m0rtgage. More than HALF of all the m0ney you make in your lifetime will go towards taxes, debt pmts, and fees.

Average homeowners stay in their homes for 7.1 years [National Association of Realtors?]. With an average 8% m0rtgage, they will sell their homes still owing over 90% of the principal. If they continue this trend, they will NEVER pay off a home in their lifetimes!

The average 45 to 54 year old has just $2,600 in the bank - Capital Research Associates

The average savings of a retired couple is 0nly $7,000.

"On average, Americans can expect to receive just 37% of the annual retirement income they will need to live comfortably" - Oppenheimer Funds Dist., Inc.

85% of Americans have a true net worth of less than $250. - Social Security Administration

Every day, over 2,200 Americans lose their jobs. Parents can expect to pay over $150,000 to raise a child to age 18; and if the child goes to college, add another $70,000 to $160,000

Unprecedented numbers of Americans are in debt for record amounts

50 million credit cards are issued annually

70% of credit card holders carry a balance, which averages over $3,000

Pmts on debt now account for 92% of family disposable income

Total consumer debt is over 5 trillion dollars. That's about the same as the government's "national" debt everyone keeps talking about

Personal bankruptcies are at an all-time high of about a million a year

Banks, finance, and credit card companies have
encouraged indebtedness

Credit card companies are marketing to college students, so the borrowing habit begins in the earliest stages of adulthood

Credit cards can now be used to pay for essentials such as groceries and rent

Credit card companies offer l0w initial interest rates to entice borrowers to transfer balances from other cards. However, the rates then increase considerably, usually after only six months.

Many companies, like GE Capital Services, are now charging penalty fees to customers who do not carry a balance on their credit card

Credit card companies normally require minimum pmts of only 3% of the outstanding balance. But that means the typical $3,900 balance, at 18% interest, would take nearly 42 years to pay off, and those monthly pmts would total $14,530.44.

Capital One advertises they'll l0wer your minimum pmt from 3% to 2% for a fee. What they don't tell you is that paying only 2% of your outstanding balance each month could make the bill last longer than you do.

People commonly borrow against their home equity. United Jersey Bank advertises that you can make minimum pmts, only on interest, for up to ten years. Imagine, ten years could pass, you could pay thousands of dollars, and still have made NO progress on reducing your loan.

Banc One is planning to test Visa and MasterCard accounts that will allow you to borrow up to 40% of your 401K plan before retirement. Nothing like throwing away your future for a little immediate gratification.

Did you know?

Every dollar you pay above the minimum monthly pmt on a debt earns you a gain equivalent to the interest rate the debt charges. In other words, if you pay an extra $100 towards the balance of a credit card that charges 15% interest, you're getting the wealth building
effect of earning 15% annually on that $100. That's way better than most investments average over time. So the more you prepay against debt balances (without adding to them at the same time) the more you earn in effective interest.