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Mortgage debt moving in right direction

Henry Blodget highlighted this interesting chart from Bloomberg, which notes that American homeowners are nearly back in the black when it comes to aggregate mortgage debt. Read the article and you’ll see it’s still a complex picture, but rising home prices and the slow process of de-leveraging mortgage debt are definitely heading in the right direction. For many families, this will have a significant positive effect on their personal balance sheets.

Should you borrow money to pay for your wedding?

ID-100177638 wedding couple
Free image courtesy of FreeDigitalPhotos.net

The answer to this question is simple . . . No!

This was recently addressed recently in a newspaper advice column, and Teresa Dixon Murray gave a very logical answer. Starting off your marriage with debt is a terrible idea. Consider eloping, or instead a very frugal wedding.

Now, nobody is saying this will be easy. Grooms will have to deal with their bride’s fantasies about what their wedding should entail. But that also offers a perfect opportunity to discuss a budget. Many young couples don’t deal with this before marriage and that leads to a host of problems. Having these discussions now is critical and both of you will learn things about one another and how you might be able to manage money together.

Once you have a budget, you can do all sorts of research to find deals or creative ways to handle different aspects of the wedding.

These are big decisions, but taking the easy way out by getting a loan is the wrong way to handle it.

Places to retire abroad

This video covers 5 options for Americans who want to retire abroad, focusing on Costa Rica, Italy, Spain, France and Ireland.

Numbers of underwater mortgages plummets

The number of underwater mortgages is plummeting as the housing market continues to recover. This will have huge ramifications for the finances of millions of people and families.

Maggie Medved was stuck with her Phoenix house for two years after the market crash wiped out the equity in the property. Last year, as prices in the area rose by the most in the U.S., she and her partner were finally able to sell the 3-bedroom 1950’s style home and move to a larger place.

“We were counting the days for when we could move,” said Medved, 40, who trains employees for weight loss company Jenny Craig Inc. “We definitely knew it was a waiting game because it would’ve been financial suicide if we had sold earlier.”

Medved was among the 12 million borrowers in the U.S. who at the peak of the real-estate downturn owed more on their mortgages than their houses were worth, blocking them from moving or saving money by taking advantage of the lowest borrowing costs on record to refinance. As prices recovered, the number of underwater borrowers fell by almost 4 million last year to 7 million, according to JPMorgan Chase & Co. (JPM), and could drop to 4 million within 2 years.

The housing market is rebounding faster than anyone thought possible, according to Blackstone Group LP (BX)’s global head of real estate Jonathan Gray, as the Federal Reserve buys mortgage bonds to keep rates near record lows and investors sop up a diminishing supply of properties for sale. Housing construction could boost U.S. gross domestic product by 0.4 percentage point and home price appreciation may add another 0.2 percentage point, Bank of America Corp. (BAC)’s senior economist Michelle Meyer forecasts.

The housing recovery is one of the main reasons why we can now start getting optimistic on the US economy. So many people were stuck in impossible situations, and now that burden is being lifted. The Fed has been a huge driver of this improvement, along with the billions in private investment looking for deals on under-priced homes.

Buy? Hold? Sell? What’s the Answer?

The economic recession and resulting volatile stock market has almost become cliché. Advertisers overuse the situation and analysts overthink the problems until we almost stop listening – but still, we want answers. Being able to discern between the nonsense and the facts is an ability that can be quite beneficial. It’s necessary to understand the ways that a shaky economic system can affect your investments and the actions you can do to counteract the effects. What can we do to protect our financial security and future in a market such as this?

Don’t Panic

People who lose huge sums of money in a volatile market are the ones who sell as soon as stock prices start to fall. This is the exact opposite of everything we know to do, yet we still see it time and again. Yes, it’s scary when the stocks you bought at $52 per share suddenly plummet to under $20, but most of the time these stocks rebound eventually. Instead of dialing your stock broker and issuing the order to retreat, hold on to your stocks. Better yet, buy more. It’s easy to say and hard to do, but the wisest advice when it comes to investing is buy low and sell high. If you think about it, it’s the only way to actually make money in the stock market at all.

Think Long Term

Too many investors look at gains monthly or yearly. The real value of our investments isn’t short-term; it’s the value they accumulate over decades of solid investing. We know the concept of diversifying investments, but we don’t recognize the importance of diversifying our investment plans. Invest some money for short return, say five years from now. Make other investments for a return in 10 years, 15 years and 20 years. This strategy hedges investments in the same way as diversifying our portfolios with a mix of high risk and low risk stocks.

Turn Off the News

Up, down, up, down…. we know how it goes. Once you’ve made sound investment decisions, ignore the buzz of the day and concentrate on the future of your investments. Historically, the market sees solid gains after a recession subsides. Even this world leading financial adviser Kenneth Fisher can’t say exactly when things will level out, but almost all economists believe the market will eventually recover. Instead of fretting over market swings due to daily news events and political situations, keep your eye on the end goal.

Is it easy to turn a blind eye when it seems like the global marketplace is in turmoil? No, it isn’t. But investors who keep their cool and continue to make sound investments not only see returns financially in the long run – their investments are helping drive the market forward into a better, more sound future for us all.

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