Mind On My Money #201: More Solutions For Black Folks Feeling Serious Debt Overload

Okay, let's recap the horrible position many of us find our selves in right now. We may be depressed and feel we have no control over our finances.

Well, you weren't feeling that way last winter when you and your girls were on the beach in Jamaica wearing $200 bikinis, de' rum punch was flowing mon', and your middle name was "all inclusive." Realizing you will never be a size 4 again, you also decided to give away that $300 dollar 'cat suit' that put half the fellas in Louisville in a neck brace. Afterwards, you "caught a sale" to redo your wardrobe and charged up $4,000.00 for "new you" clothes.

And fellas, don't think you're exempt. You got a bonus at your job, considered it "found money"and bought the 46" flat screen tv. By the time that bad boy was mounted, complete with surround sound and "proper" viewing chairs, you spent $3,000.00 over your bonus money.

Now I shouldn't have to remind you, but I will. Here are your WARNING SIGNS OF DEBT OVERLOAD:

Skipping payments

Using credit cards to pay other credit card debt

Switching cards to get a lower interest rate

Arguing with your partner about the bills

Loosing sleep or constantly stressing about your debt

Not knowing how much debt you owe

Getting calls from creditors

If even one of these sounds like you, here are three things you can do:

1) STOP SPENDING - You know those people who bring their own lunch to work, think twice about making that extra car trip, or stop going to the local bar after work -- that needs to be you. Moms, time to start making a grocery list and stop impulse and mid-week buying. Guys, now is the time to start taking your woman to the park or the kids to the local beach. As for clipping coupons, you are now one of those people!!!

Until further notice you are on 'lock-down'.

2) JEOPARDY IS A GAME SHOW, NOT YOUR LIFE. Pay the rent and keep the water and lights on!!! This class is called "Basic Preservation 101", so don't flunk out. Mortgage lates and foreclosures are the #1 worse thing on your credit report. But #2 are car repos. If you are leasing that 'Beemer', renegotiate with the company before they take it. Or maybe you should just give it back. In both cases tell them you have lost your job, working temporary and don't want to fall behind. Everything is negotiable, communication is key.

3) LOOK AT THE BIG PICTURE & MAKE A BUDGET PLAN. Oooo did that hurt. It was meant too. Pull out all those credit card bills and other bills. Make stacks, "must pay", "should pay", "want to pay." Make a list of all the out going money and all the in coming money. Then next to it put a list of things you are determined to do to make that list go away. Visualization does work. If you can conceive it you can achieve it.

Start with debt shrinkage not complete elimination. You did not create this debt over night, so it won't disappear over night. But if you create a plan, you will start sleeping better at night.

MIND ON MY MONEY: TAKING A BITE OUT OF MY STUDENT LOAN

If you are like many people, you have a student loan.

Now if you have done your homework you first have taken two or three loans and have consolidated them into one.

Second, you've contacted your lender and explained your full intentions to pay back the damn ...er generous loan if they would only negotiate the outstanding balance down to the lowest possible interest rate.

Third, if you didn't like the newly negotiated rate, you found another lender to take over the debt at a more acceptable rate, right? So now all that said and done you have say ... a $94,000 outstanding balance.

Now for those who are ready to go forward, let's proceed. You got this huge "nut". It's ugly and you can't stand to see it every month. So you get the brilliant idea to throw some extra money at the principle, even make double payments! And after two years you don't seem to see that principle move much at all and you think "Hell, I'll be in a wheel chair paying this off."

But don't despair. If you have done steps 1, 2, and 3 listed above, your student loan is lower than any other type of loan you can get on the market today.

Your principle is not going down real fast because just like a mortgage the first few years most of your payment is going to interest and not principle.

If you do decide to make extra "principle payments," always make out a separate check with the words saying "extra principle payment" and each month you call the lender to make sure they have applied it to your principle.

Now if you don't make that extra payment, don't sweat it. You probably have better things to do with your money than pay off a low cost lone. Like paying off that 23% credit card. How about funding that retirement every month with the maximum contribution. How about keeping you life insurance policy paid up for your wife, kids etc.

I know, pay that child support so you can get your karma together! What, don't own a house? Let's get that down payment together, cause it's hard as hell to get those no money down mortgages right now!

Whatever, you do -- handle it folks, and make your life a little easier!

BUT DAMN #226 MY DREAM HOUSE - SNATCHED AWAY FROM ME!

FOUND IT, MADE AN OFFER,

BUT DAMN... I GOT OUT BID!!!

With all the properties on the market at nose-diving prices, you would think that you could have what you want, when and how you want it. But you, Dorothy and Toto aren't in Kansas any more.

You earnest buyers are butting heads with left over schemers, deceivers and dream weavers. Like pulling trout from a well stocked artificial lake, they're trying to get over, convincing sellers that their purchase bid is the Holy Grail.

Good intentioned buyer, "BACK THAT THANG UP." Approach the seller with a back-up offer in case the first one doesn't fly. "Stuff" happens, and a lot of these wannabe land barons are still thinkin' they can get the same great rates and loan programs, and that lenders are still throwing around a lotta' love.

Well, that's not the case. Major lenders have become stricter, secondary market loans have dried up, and people on their third or fourth refi are now in foreclosure. Two and a half years ago it was find it, fund, it flip it. Well, that train has left the station.

That said, don't feel you have to go "all in" and raise your original offer to meet or beat the offer on the table. Go with your gut and make your first offer (as long as it's not too outrageous), even if you get out bid.

When the first buyer drops off, you're ready to go in and looking good! Here are some tips:

1) A pre-approval letter from your lender (gives seller a sense of security).
2) Have your lender ready, willing and ABLE.
3) Have a Backup lender in case the first one messes up your deal. (Don't tell your first lender).
4) Be ready to pull the trigger on that earnest money.
5) If you can close within 30 days, put it in your backup offer.
6) Make the seller think your speed and loan ease are more important than an over inflated money offer.

7) Make sure you can remove your offer at any time before becoming the primary offer - in case you find another dream house.