Mortgage Deferrals - Shameful!

Almost from the beginning of the COVID-19 health crisis, the Federal Reserve has been pumping billions of dollars into the financial system. Some call this a gift to hedge fund managers but that's not accurate. What it does is make money available to the banks at virtually no cost so that they can keep loaning money out to businesses. Without these loans many companies - particularly the smaller ones - would risk going bankrupt, resulting in massive unemployment and financial loss. According to JPMorgan Chase, over 99% of all companies in America are small businesses that create the vast majority of jobs in the country. So, these infusions are a good thing - besides the loans are repayable to the Fed.

Our question is: if the banks have an almost limitless supply of virtually free money, why don't they pass a little on to their customers in terms of mortgage, loan, and credit card payment deferrals? Well, some banks have started to announce deferrals for mortgages. Great news, right? Wrong. What they're not very clear about is the fact that when the deferral period is over, you will have to pay them extra interest. Not only are you still responsible for all the regular interest on the loan or mortgage but also fr the period of the deferral. That's interest charged on the interest. 

So, what might seem on the surface to be a good customer service gesture turns out to be the bank's Spring marketing initiative, which we call shameful. Many people are - through no fault of their own - forced to stay at home, many without a paycheck, hoping that their jobs will still be there when this crisis fades. Now is not the time to bleed your customers for more money.

How do you fight this? Education. The more information people have, the less chance there is of companies taking advantage of them. Here's what we're proposing: Please share this post with all your friends so that they don't become victims of this cash grab. Secondly, bulletproof yourself against this and other scams by educating yourself about personal finance. Our new online course explains in really simple terms what you need to know to avoid these and other common traps that keep you in debt and living paycheck to paycheck. Those problems will disappear if you take this course and follow the advice. 

We guarantee it. And, to make it even easier for you during this stressful time, we'll give you a $200 discount off the regular $295 price for educating yourself. Just put ABCGUYS (one word) in the coupon code at checkout when you register for the course. Seven, 30-50 minute videos (including worksheets and calculators) you and your family can watch in the comfort and safety of your home. Stop giving your hard-earned money away to unscrupulous banks and insurance companies. Educate yourself. You can do this: www.financialgps.teachable.com  

Investor Advice: Stay Calm and Change the Channel

Understandably there are only two topics of discussion these days: the latest on the COVID-19 virus and the stock market meltdown. Health care workers are doing their absolute best to care for everybody, sometimes with limited resources, and we applaud and praise them for all that they do. When it comes to your investments in the market, here's what you need to know: the experts you see on TV and read in the papers are only guessing. Nobody really knows what's going on or what is going to happen. We've been reading forecasts from very well paid, highly credentialed experts for years. Every day we read half a dozen experts warn that a market meltdown will happen within the next week. And, every day we read half a dozen other experts predict the market 'Bull Run' to last for another 2-3 years. It's like the broken clock on the wall: it gives the right time twice a day.

There have been 11 Bear markets in America, starting with the crash of 1929 which was the most severe and lasted just shy of 3 years. The 2nd biggest crash was the one in 2008 but that Bear was fully corrected in only 17 months and has been on a run almost constantly ever since. The one in 1987 lasted only 3 months. The point is that regardless of how crazy the markets go, and how much money your portfolio lost, you haven't lost a dime unless you sell. Second, the market has always come back to where it started and then continued to make people wealthier. It's just a matter of time. 

Here are 5 tips to consider for living through a market meltdown:

1) Change the Channel. Checking your portfolio several times a day will only stress you out and wreck your sleep. There's really nothing you can do about this. The market will recover, it just takes time. Go for a walk, watch a funny movie, read a good book. 

2) Do not sell! Selling is a losing proposition in times of turmoil. Hang in there, good quality companies will recover. If you need cash, sell your bonds first, not your stocks. Bonds will have incurred less loss.

3) Focus on the Long Term. An investment portfolio should be balanced and set up to meet your future needs. There will always be blips along the way, just let the cycle run its course.

4) Learn from the Market. How well set up as your portfolio? Was it riskier than you are comfortable with? Was it diversified enough? Did it contain enough Blue Chip companies? These are lessons to be learned in an experience like this that can help you plan better for the future. Wait until the market corrects itself and then re-balance for your future. Remember Warren Buffett's thought on buying good quality stocks: "If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes."

5) Re-evaluate the advice you've been getting. Has your advisor been good or bad in his or her advice? Did their advice reflect your long term needs and goals or theirs? Remember that they didn't cause the market chaos so don't replace them just because your portfolio lost money - everyone does, including the experts. Now that you have greater clarity on your comfort level with the markets ask yourself whether your advisor is on the same wavelength. If not, find a new advisor. Now.

If you want to be successful in the markets you really need to invest a little time in learning the basics of how the system operates, and then how to pick the right adviser for you - and how to avoid the crooks. Consider spending some of your time in self-isolation reading books or taking an online course - financialgps.teachable.com - so that you are better prepared for your future. Don't be dissuaded from staying invested, or from entering the markets, because of this downturn. The markets will return, just give it time

5 Easy Steps to Financial Independence

To be financially independent is to be free: free from debt, free to move around, free to leave an unloved job, free to fulfill your kid's dreams and freedom from the stress of living paycheck to paycheck under the scrutiny of bill collectors. Does that sound appealing? It's a wonder that more people don't want to invest the little bit of time and money needed to learn how to achieve it. When you're ready, this is what you'll learn to do:

1. Pick some realistic Goals: most people don't need a billion dollars to be happy. Typically you want to live in a nice place in a safe and comfortable neighborhood that's close to work, and good schools for the kids. Throw in a nice vacation once or twice a year and you're good to go. Those goals are achievable to virtually anyone willing to do a little work and make a few changes to their spending habits. But, if you don't know where you're trying to go, you'll never get there. 

2. Monitor your Money: If you ask most people how they spent their money in the past 2 weeks you'll be greeted with a blank stare. We're usually pretty good at spending money but less so when it comes to determining whether what we bought was something we wanted or something we needed. Once you've picked your goals it will be a lot easier to say 'no' to that extra Latte or bag of chips and put that money into savings for the future instead.  

3. Eliminate Your Debts: Once you start to save some money by cutting back on unnecessary expenses, put all of it into paying down your high-interest debts like credit cards. Mortgages are not the problem; we'll deal with them later. It's the credit card debts and payday loan balances that keep us locked in a kind of debtor's prison. Pay them all off as quickly as possible. We can show you how.

4. Start a Savings Plan: Once you're out of debt, celebrate your victory - frugally, of course - with a nice dinner or bottle of wine with friends, then put all of those extra dollars you've learned to save into a savings/investment plan. As we say, most people work for their money but the smart ones let their money work for them. Be one of the smart ones.

5. Be a Life-Long Learner: The four steps above weren't very difficult to accomplish, and once you do, you will have literally changed your life for the better. So, why stop there? Why not increase your knowledge about financial literacy? Maybe you want to accelerate your earnings by upgrading your skills and getting a better job, or learning how to start a small business from your kitchen. It's all possible with just a little investment of your time. Want to get started?