1. Don’t buy if you can’t stay put.

If you can’t commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner – even in a rising market. When prices are falling, it’s an even worse proposition.

2. Start by shoring up your credit.

Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

3. Aim for a home you can really afford.

The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you’ll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.

4. If you can’t put down the usual 20 percent, you may still qualify for a loan.

There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price.

5. Buy in a district with good schools.

In most areas, this advice applies even if you don’t have school-age children. Reason: When it comes time to sell, you’ll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.

6. Get professional help.

Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.

7. Choose carefully between points and rate.

When picking a mortgage, you usually have the option of paying additional points — a portion of the interest that you pay at closing — in exchange for a lower interest rate. If you stay in the house for a long time — say three to five years or more — it’s usually a better deal to take the points. The lower interest rate will save you more in the long run.

8. Before house hunting, get pre-approved.

Getting pre-approved will you save yourself the grief of looking at houses you can’t afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

9. Do your homework before bidding.

Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that’s about eight to 10 percent lower than what the seller is asking.

10. Hire a home inspector.

Sure, your lender will require a home appraisal anyway. But that’s just the bank’s way of determining whether the house is worth the price you’ve agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.

The above post is from the CNN Money series called “Money 101.”

Financial literacy...not just for bookworms

In a recent report referenced by Southern Methodist University, in a study called “Economic Factors and the Debt Management Industry” by Richard Briesch PhD, 41 percent of households give themselves a C, D, or F in financial literacy.

That’s not good.

What’s your level of financial literacy?

1. 57 percent of households do not have a budget. DMB Financial starts every engagement with clients by jointly developing a budget. Knowing where you are, where you begin, is the first step towards better financial literacy.
2. 32 percent of households admit they have no savings. DMB Financial helps you set up an independent savings account at an FDIC insured institution. This is your savings account. It holds your savings. Creating a savings mechanism is a critical. It gives you the tools to make good financial decisions. You have a budget and, over time, develop a healthy savings amount. Now you just have to put that plan into action.
3. 77 percent of households admit they’re saving less this year than they saved last year. Even in tough economic times, with a good budget and the right savings plan, you can improve your savings situation over last year. The average DMB Financial client is saving over $700 a month by the time they graduate our debt settlement program! That’s amazing, especially considering the average income is around $50,000 a year.
4. There is no long-term plan for wealth creation. Rich people have financial plans, investments, and advisors. Are financial plans, investments, and advisors only for rich people? Or, are those people rich because they have a financial plan, investments, and advisors! Many graduating DMB Financial clients transition to our partner’s financial planning services. They start retirement savings, college funds, and some even start buying stocks and bonds. In just a few short years they go from being buried in debt to having a plan that gets them to $100,000 in the bank or more. Hello retirement. Hello paying for kids’ college. Hello new home.

Financial literacy isn’t something just for the rich and famous. DMB Financial enters every client into its 36-month financial literacy series of email newsletters. We partner with a major financial planning service. They provide our clients with free financial planning consultations to help identify their goals, their dreams, and put a plan in place to reach them.

Get out of debt. Then create wealth. Come join the financial literate!

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For a free debt analysis and preliminary budget, call a Program Consultant at (866) 869-6959. You’ve got nothing to lose, except the debt.

This article is for informational and educational purposes only.  It is not intended to provide legal, tax or financial analysis.  Please consult your attorney, accountant or tax advisor if you have legal, financial planning, or tax related questions.

The official release will happen in a March issue of Forbes® Magazine, but DMB Financial was just named one of the Top 5 debt settlement companies in the entire United States!

We couldn’t be happier for our hard working settlement, client services, accounting, support staff and sales personnel. Thanks to all the great clients who voted with their feet and made DMB Financial their #1.

We’re also celebrating two new milestones. As of January 10, 2010 we’ve saved over $123,000,000.00 for more than 13,000 clients nationwide. We’re looking forward to another mega year of restoring financial freedom to thousands of Americans!

For those of us struggling with outstanding debt problems, the pressure placed on our lives by unmanageable debt can appear insurmountable. Hefty minimum payments, harassing creditor calls, and a falling credit score are all factors that lead to our feeling of helplessness.

There are several common mistakes many of us make that lead to this situation. Recognizing these mistakes and taking action to correct them can help you eliminate your debt problems for good and begin your journey towards financial freedom.

1. Continuing to Use Credit: If you are continuously adding additional debt to your current amount, you are making it increasingly difficult to become debt free with each swipe of the plastic. Leave the cards at home or even cut them up to make sure you don’t add any more fuel to the fire. Use cash for everything, and if you don’t have the cash, you can’t afford it.
2. Ignoring the Problem: Pretending that your debt is not a major problem is a serious mistake. Making the minimum payments will only guarantee that you continue paying the credit card companies for many years to come. For instance, if you have a $7,600 credit card balance with an 18% APR and only make 2% minimum payments, you’ll need 53 years to pay off your debt. Total interest-$21,731! Sound the alarm bells now and recognize the problem. The sooner you begin taking steps to address your debt problems, the sooner you can begin resolving them.
3. Failing to Consult a Debt Settlement Professional: Debt settlement professionals work with your creditors to negotiate your outstanding debts down to a manageable sum. Creditors may negotiate on outstanding debts, as they stand a better chance of regaining some of their investment by settling for a lesser amount, and debt settlement professionals know all the ins and outs of the industry. Many such debt settlement programs allow you to structure a payment and savings plan that works on your terms and within your budget.
4. Leaving a Debt Settlement Program Early: Quitting a debt settlement program prior to resolving all your outstanding debts can hurt you in many ways. First, you may lose any fee or program costs which you have already given the debt settlement company for their services. Second, if you wish to join another debt settlement program later on down the road, your previous failure to complete such a program will be a red flag to the new company, who may decide not to work with you. Third, you are still in debt! Sticking with the plan and completing your debt settlement program will allow you to use your time, energy, and finances to increase your savings rather than deplete it.

Harassing phone calls from creditors is a concern for many individuals facing unmanageable debt. The debt collection industry is big business. In fact, the Association of Credit and Collection Professionals (ACA) reported that roughly 6,500 collection agencies in the U.S. recovered more than $39 billion in debt in 2005 alone. Therefore it’s no wonder that these agencies often use aggressive tactics to get their share of the pie.

Strict federal and state regulations regarding debt collection practices, however, offer consumers protection from harassing collectors and have severe consequences for companies operating in an improper manner. By educating yourself on a few of the regulations binding these creditors and collectors, you can put an end to the harassment.

The Federal Trade Commission’s Fair Debt Collection Practices Act applies to third-party collection (not first party creditors) and was designed to protect consumers from devious and aggressive collection practices. Specifically, the Act states that collectors: 

1. May only contact you between 8 a.m. and 9 p.m.
2. Cannot use cell phone numbers for collection calls
3. May not contact you at work if you tell them your employer disapproves
4. May only contact you once per day
5. Must cease and desist future contact once you notify them in writing you do not want anymore calls (they may, however, send you one final notice regarding the next course of action)
6. Additionally, many collection agencies have been known to make subtle (or not so subtle) threats regarding garnishment of wages or even imprisonment for failure to pay debts. Section 807 of the Fair Debt Collection Practices Act “prohibits falsely representing or implying to the consumer that nonpayment will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person”.

What does this mean for you? It means that you have rights too. If you are receiving harassing calls, begin by telling the caller you believe they are harassing you and that you are aware of your rights under the Fair Debt Collection Practices Act. Next, send a formal letter to the collector saying that you are aware of the debt, are working to resolve it, and do not want to receive any additional calls (keeping in mind that the collector is allowed to send one final notice regarding their next course of action). If the harassment continues, notify the Federal Trade Commission or your state’s Attorney General’s office.

While debt settlement professionals cannot reduce harassing phone calls, many firms encourage their clients to refer all calls and contact to them for resolution. In some cases, the client is encouraged to send the collector a change of address and phone number listing their debt settlement professional’s contact information. These firms will also work with the collectors to come up with a solution to settle your debt and end the harassment for good.

Now that you have the knowledge you need to fight back, you can enjoy your dinner in peace and stop screening your calls — unless of course it’s your mother in-law…

Debt settlement programs are an effective way for those of us with growing debt problems to get back on our feet. Many debt settlement participants, however, leave their structured programs before completing the debt settlement process. The result is continued financial hardship.

See below for the 3 secrets to completing a debt settlement program to ensure you become financially independent:

1. Stop Accumulating Debt: If you are continuously adding additional debt to the amount your debt settlement company is trying to settle for you, you are making the job that much more difficult and lengthy for yourself and your debt settlement professional. Stop adding anymore fuel to the fire to make sure you can complete your settlement program within a certain timeframe and within the budget you set up at the beginning of the process.
2. Pay As Much As You Can: The more money you can put towards settling your debts each month, the quicker you can complete your program and become debt free. Take a weekend job, sell off unused or luxury items, or cut your monthly expenses in order to put as much as possible towards your debt settlements each month.
3. Stick With The Plan: Even though you may be living a more frugal life than you are accustomed to, the end result is well worth the months of hardship and budgeting. Keep in mind how much weight will be off your shoulders once your debts are eliminated, and mark your “Financial Independence Day” on a calendar to remind yourself that freedom from debt is getting closer every day.