How To Recognize You Are In Trouble

Hi Folks,

We just got home from Iowa last night. Wow - the flooding is incredible....so much devastation. It makes me even more excited to move our training classes there. There are so many homeowners who need our help right now. The short sale opportunities will be amazing...

The more we travel, the more we see people in trouble. It stuns us how many homeowners get into trouble and don’t realize it until it is too late. One of the biggest problems is that many creative loans make it so easy to buy a house. In the early part of the 2000’s a bank would lend you money based on your debt to income ratio and your credit score. Back then, a maximum of 30 percent to 40 percent of your income could be used toward a mortgage payment. Meaning, if your monthly income is $2,000, you could qualify for a mortgage payment between $600 and $800 per month PITI– with the proper credit.

Banks figured that if you used more than 40 percent of your income for the mortgage payment, you would be “house poor.” If you used $800 of your $2,000 income for a mortgage payment, that leaves $1,200 for everything else.

Let’s look at what this could mean:
Income - $2,000
Mortgage - $800
Electric - $150
Car Payment - $300
Gas - $250
Phone - $100
Groceries - $400

Based on these very realistic figures, you are dead broke every month. What if you have a car repair, medical bills, need a home repair, need to buy clothes, or anything else? Where does the money come from? What about trying to save for retirement or trying to care for ailing parents?


Sometimes life just takes over, you have a problem, you use some of the money that should be used for the mortgage payment, and next thing you know – you’re one payment late, then two, then three, then the bank files foreclosure papers, and then everything spirals out of control.

Most Americans live paycheck to paycheck. The best way to stay ahead of the game is to control your debt. If you are a two-income family, our thought is to live on one paycheck. This way, if one of you gets sick and can’t work or if you fall victim to divorce, your lifestyle won’t change. We realize that right now may of you are thinking – no way could I possibly do that, our bills are too high. By living on one of the two incomes, you can get so far ahead – it would stun you.


If you are a one-income family, try living on 80 percent of your income. I realize how hard that can be, especially if you are a single parent. You must cut back, downsize your lifestyle, get a smaller house or apartment, drive a less expensive car, pay off credit card debt, save 10 percent of your income for emergencies, and don’t forget to tithe 10 percent of your income to God.

Don’t worry about keeping up with the neighbors. The neighbors aren’t going to pay your bills if you get into trouble. In fact, my guess is that most of your neighbors will gossip about you if you do get into trouble. It is sad how shallow our society has become. You don’t have to have the best of everything. You do need to be prepared for emergencies and hard times. Our economy isn’t going to pick up for several years and we don’t want to see you fall victim to the hard times that lay ahead.


If you have already fallen into hard times – don’t worry about it. We have so many great ideas for you and you can start over. Did you know that Henry Ford went bankrupt seven times? Think about it – he started a company and went bankrupt; started another company and went bankrupt; started another company and went bankrupt again; started yet another company and went bankrupt again; now it’s getting hard to read – he started another company and went bankrupt yet another time; with all the naysayers in his life he started another company and went bankrupt again; still not defeated, he started another company and went bankrupt again; then he started Ford Motor Company – who you may be making payments to right now.

If you look at the average life span, we live to be 75 or so. If you are in financial hardship and it takes you three years to recover, in the big picture, it’s not that much time. When you recover and start over, you’ll have many more good years than bad.


People tend to live above our means in this country. We have both traveled extensively around the world and we are the most spoiled country. Personally, we like living a spoiled lifestyle, but we didn’t come by it easy. We have both had financial problems in the past, been divorced, suffered foreclosures, and barely gotten by. Through a lot of hard work, cutting back, and many blessings from God, we were able to make it to the top percentage in the entire country.

In the mid 2000’s, the mortgage industry came up with what seemed like a good ideal at the time – easy loans to boost the economy. These loans were designed to give as many people as possible the chance to live the American dream – homeownership. People are often so focused on owning a home that they are willing to stretch themselves just to do it. This is where is all started to go downhill. Too many people went out on a limb. These creative loans did just what they were supposed to do - boosted the economy. The problem is that no one really thought it all the way through.

Over the next few weeks, I am going to offer advice to people who might be struggling as well as those of you who are or want to be investors.

Folks, remember - no matter how bad your day seems or how many problems you might be having - God loves you...and so do I!!!!

Dwan
www.youtube.com/dwanbenttwyford