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GM to cut salaried workers, production, dividend
Tuesday July 15, 12:44 pm ET
By Tom Krisher and Dee-Ann Durbin, AP Auto Writers

General Motors says it will cut salaried jobs, production, dividend to raise turnaround cash

Several thousand jobs will be cut through normal attrition and retirements, and through early retirement and buyout offers, Henderson said. The company could resort to involuntary layoffs but does not want to, he said.


The Moral:
DO NOT rely solely on your Employer's nor your Government's ideas for your retirement security! Plan & prepare for your private security today! There are many ways to guarantee secure income privately, and fund it safely, tax-free. don't be caught unawares.

Dave Donhoff
Leverage Planner

Paul Muolo - "The Chain of Blame"

Paul is a long, long, longtime industry journalist & observer... great insight.


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Great NPR interview... 34 minutes long, kick off the shoes & grab an adult beverage;


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Dave Donhoff
Leverage Planner

WaMu Says It's `Well Capitalized' After Share Slump


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<SNIP>

July 14 (Bloomberg) -- Washington Mutual Inc., after dropping the most since its initial public offering in 1983, said it is ``well capitalized'' with more than $40 billion in liquidity and $150 billion in retail deposits.

</SNIP>

This is like watching a horror flick... the Cinematic style typically has the victims killed off in exact order of which mentions, denies or confronts the idea of "death" in what sequence!

WHEN will the public affairs departments learn that these "All Is Well" announcements are ALWAYS the bad luck precursers to actual failure!?!?!!!

Dave Donhoff
Leverage Planner

Originally Published at The Motley Fool


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ject: Re: Shop myself? Or pay a broker? Date: 7/7/08 9:48 PM
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Which direction is best? Shop myself or pay a broker?

It really depends...

What do you really want in terms of results?
What do you believe about retail lenders? Brokers?
How much do you understand about mortgage finance?
(And do you think it is important to understand much?)
Where do you feel your time is most valuably spent?
Do you normally prefer to pay and shop retail?
Do you normally prefer to pay and confer with specialists, or generalists?
What's most important to you about WHO you select to structure your finance?
Do you trust your own judgment of people more, or do you rely on retail brands and reputation to assure you of 'quality'?
Do you usually believe what you see advertised online and in print?
How willing are you to fully trust an actual advisor if you chose one?
Do you see the loan amount in question as significant to your net worth, or not significant?

Ultimately, there is no "right" answers (but those of each individual.) You'll tend to find one quality of professional in the brokerage division of the industry, and a different quality in retail. The qualities are not necessarily above or below one another, but are definitely DIFFERENT in what they provide the consumer.

Simply thinking "I want wherever the lowest rates are" is a formula for disaster (minor, or major.) HOW you structure your financing (overall, not just the mortgage) can have a much heavier effect on your net worth, over time, than the actual rates & closing costs.

Here's what I can tell you;
A) Some people never seek (and naturally then never find) trustworthy advisors,
B) In general, these people tend to have self-justifying misery,
C) If you DO carefully and methodically seek based on quality, you will find it.

I send you strength and diligence,
Dave Donhoff
Leverage Planner

http://www.frontlinethoughts.com/survey0608_audio.asp

For those unfamiliar with John Mauldin, he is a highly respected economics and markets analyst... I recommend signing up for his e-newsletters...

This is an interesting talk (long at 45 mins....) and the very last comment is that he is expecting 30 FRM to drop UNDER 4%

Of course, that's nothing guaranteed... but it is interesting that another sharp mind sees longterm rates coming back down to (or below) the lows of 2003.

The Past, Present and Future of the U.S. Mortgage Market

By William R. Emmons


The U.S. mortgage market evolved through several distinct phases to reach its current status as the largest, most innovative and most complex home-financing market in the world. Broadly, there were five major eras during the last century. How the mortgage market evolves during the next few years depends in large part on whether the private-label mortgage-backed securities (MBS) market recovers and on the extent and nature of any potential federal government interventions into housing and mortgage markets.

More at the link...

Originally Published at The Motley Fool


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We found a mortgage broker who we like. She seems to be honest, experienced, and on the ball.

Frankly, that's 95% of the game, right there.

DH's boss keeps trying to convince us to also contact his broker. He says that with all of the programs out there it is impossible for one broker to have information about all of them so we should work with several at once.


The bossman is clearly a good salesman... but not entirely accurate (especially now, after the credit collapse.) There really isn't ALL that much variance in qualifiable programs as there was 12-24 months ago, and a good broker would certainly have access to virtually all remaining programs.

Beside, far more important than global program access is being worthy of trust & respect. "Character" in other words. When you have someone that fits that bill, you can count on them to FIND you the best fit, even if its not already in their standard collection of programs.

While logically this makes sense, it seems really underhanded to use more than one broker. On the other hand, if this is the industry standard I don't want to be a sucker just because I'm nice... Should I use more than one person or go with my gut that this is not an ethical way to do business?

Are you uncertain of your current broker's ability (and character) to find the best solution for you if it weren't already in their regular playbook?

I would say (as a broker myself) that there's nothing at all unethical about shopping around to find the broker you most trust and respect... but once you've found one, put THAT one to work. "Dating around" more of them simultaneously won't likely get you anything better at all in the end.

Luck!
Dave Donhoff
Leverage Planner

Finding a decent return in life insurance, with Joe Heider, Dawson Wealth Management; Adam Sherman, Firs-Trust Financial Resources; and CNBC's Dennis Kneale & Sue Herera.

(Only ‘5’ minutes long…)

Here is the video:

Originally Published at The Motley Fool


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Our first rate adjustment is coming up in august and our rate is going to jump from 5% to 8% (ish) so we'd like to refi our two loans into a single loan.

Are you SURE your rate is actually due to increase? Have you checked your NOTE for the actual margin (likely 2.25% or 2.75%) and the actual index the loan is tied to (likey either the CMT, or LIBOR... both under 3% currently.)

You may ultimately be wise in refinancing one way or the other... but you might not have the gunbarrel-of-urgency to your temple that you think you do.


Since our loan payments are both coming out of my wife's paycheck (easily) and she has a very good credit rating compared to me, should/can we refinance using just her income and credit score?

Sure, I don't see why not. Probably your best bet is to have your loan pro review your joint file in full, and then structure your financing to your best interests among the currently available methods (which change constantly now, and can't be assumed from anything advertised online or elsewhere.)

Cheers,
Dave Donhoff
Leverage Planner

Article: http://www.newsweek.com/id/141958

You can't blame someone for trying to strike a bargain, especially not in this economy. Like many real estate brokers, Glen Kelman, the founder of the two year-old brokerage firm, Redfin, think things are getting out of hand. Agents in his offices up and down the West Coast, in Boston and Washington D.C., have been inundated by buyers intent on submitting repeated lowball offers.

Video:

Interesting, if long, read...

http://www.house.gov/apps/list/hearing/financialsvcs_dem/osbennett061907.pdf

Originally Published at The Motley Fool


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I'd like to offer a few guiding principals you'll want to hold up as guidelines for your decision processes.

A) Keeping a minimum of 6-12 months worth of your total living budget (including everything... housing, food, transport, personal care, spice-of-life quality stuff, etc.) as seperated, safe cash reserves. If you don't have at least this much in safety reserves, then concerns about lower interest rates (which aren't all that much lower right now than where you are anyway) are irrelevant.

B) AT MINIMUM, fully funding/depositing all employer-matched retirement investment accounts. The basic return to you, on a very simple face-basis, of a 1-1 match is 100% annual return on your dollar (first year,) which dwarfs any 1-2% 'savings' you could ever hope to achieve by refinancing,

C) Fully funding (with every extra dollar you find) all growth accounts that result in compounding interest/returns (where the money you earn then also earns additional money from that point onwards) before sending any of your dollars to one-time savings of your mortgage balances.

D) Avoid shorter amortization schemes (15 year loans, instead of 30, as an example.) Amortization is not your friend unless (when you are responsible for your own budget) YOU are not your own friend. Amortization removes the control of your financial decisions from you, permanently by contract, and prevents you from sending your dollars to safer, more accessible, and potentially stronger growing accounts... which you could then later use to wipe out the mortgage when it made the most sense.

LASTLY....
Add up the entire anticipated amount of cash closing costs on the anticipated refinance (on a 30 year amortization term MINIMUM,) and the reliable actual interest rate potentially lockable at that amount of closing costs (lower rates will have higher costs, and vice versa, so its important to do your best to nail down the linked rates to costs estimate for your calculations.)

THEN, determine what your actual monthly INTEREST (not just payment) savings will be after the potential refinance. (If you're not already very strong on additional monthly income, DO NOT take on any refinance that INCREASES your required payments.)

THEN, take the total closing costs, and divide that by the monthly interest savings...
THIS will tell you how many months you will have to wait until your "savings" break even on your transaction "costs."

(And this is simplistic... it is actually a bit longer, because your costs cash COULD have been earning compound returns instead... so the loss of those retursn actually ADDS to the real costs of having done the refinance.)

When you see how long that "break-even period" is... compare it to the monthly interest 'savings' it is 'winning' for you.

THEN you will have a good handle on whether this is something you both feel will make sense or not.

All the best!
Dave Donhoff
Leverage Planner

Originally Published at The Motley Fool


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This is always a point of debate. For example, two mortgages that we were comparing recently had a 20 month recoup time after paying the points. That's less than two years - and we were planning on spending at least 3-5 years in the house. In our case, paying the points makes more sense than not paying them.

That's a valid consideration.

Whether or not to buy the interest rate down (by paying discount points) isn't quite as black & white as my friend Rayvt paints it...

If you are extremely confident you'll have no reason to rebalance or re-access your accumulated equity, nor sell your home, nor see interest rates or terms improve enough during the period of breakeven for the buydown discount points... THEN analyzing how deeply to buy the rate down can make sense.

"Par" is the term the industry uses for the current interest rate where the lender doesn't subsidize any of the closing costs (rebate points,) nor charge any discount points to reduce the interest rate.

The cost (typically expressed in 1/8ths of a discount point/percentage) to buy down each incremental decrease in the face interest rate is cheapest-per-unit immediately around "par"... and gets fatter in cost as you stretch further away from "par." (This is the identical issue with premiums on options, if any options traders are reading this.)

So, if par is 6%... a rate of 5.875% (5 7/8%) may cost 1/4 discount point... for 1/4 point per 1/8 rate...
Going from 6% down to 5.75% (an additional 1/8 in face rate,) may cost a total of 5/8... or 2/8 (1/4) in discount points for the first 1/8 in rate, and then another 3/8 for the second 1/8 in rate.

This is an illustrative example... NOT numbers taken from the real world (so don't run off expecting to be able to always buydown off of par at 2-1... its just not always that simple.)

Here's more about Points;
http://www.fool.com/imo/2001/a011213.htm


Incidentally, I do believe points on a new, non-refinanced mortgage are tax deductible in the first year. Points on a refinanced mortgage are deductible over time, as well.

Correct!

Cheers,
Dave Donhoff
Leverage Planner

Originally Published at The Motley Fool


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Stories, speculations, justifications & drama are all subjective, and (AFAIAC) pointless but for entertainment purposes...

Here's the truth;

Daily Treasury Yield activity
http://screencast.com/t/xUMCT5Ud8Ut

Monthly Treasury Yield activity
http://screencast.com/t/5IGR5ntsHi

One DECADE of Treasury Yield activity
http://screencast.com/t/iXQ0iK8d

As you can see, the more you restrict your timeframe of vision, the more great drama appears to show....

In reality, the treasury yields are merely doing what traders call a "dead cat bounce" off of what is close to a century-low. Treasury yields can very reasonably be expected to rise to the 44-46 levels here before finding "resistance" from which they may resume the prevalent downward pressures.

Interest rates will continue to be volatile, which will naturally jangle the nerves of an already nervous public, and send journalists into a frenzy as the demand for justification swells... but, as the dust settles, rates are extremely unlikely to rise above the 2007 levels, and quite likely to turn back to approach previous lows again.

That's what I see... leaving all the drama aside & just looking at the facts very objectively, from a technician's view.

Cheers,
Dave Donhoff
Leverage Planner

Originally Published at The Motley Fool


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Virtually NOBODY gets trapped into foreclosure or bankruptcy when they have access to cash.

Over 80% of foreclosures occur WITH PLENTY OF EQUITY REMAINING TO PAY THE BILLS... but the owner's inability to re-access his/her value.

My advice;
Play it safe!
Cash is security.

Don't risk losing the majority of your net worth and good credit to avoid 1-2 years of 0-1% net carry cost (interest paid minus safe interest received on the cash in seperated growth accounts.)

Don't lose the war for the savings of a nail*.


Cheers,
Dave Donhoff
Leverage Planner

(*Benjamin Franklin in "Poor Richard's Almanac":

For want of a nail, the shoe was lost;
For want of the shoe, the horse was lost;
For want of the horse, the rider was lost;
For want of the rider, the battle was lost;
For want of the battle, the kingdom was lost,
And all for the want of a horseshoe nail.)