“It’s going to be harder to get a government-backed mortgage from now on.

Looking to shore up its weakening finances, the Federal Housing Administration is set to announce stricter standards on Wednesday.

The agency, which insured nearly a third of new mortgages in 2009, will increase the premium it charges for its mortgage insurance and require those with weaker credit scores to come up with larger downpayments.”

The government is finally getting around to a new way of doing things. Generally people who had poorer credit had to pay more or a deposit of some sort for items. When I went to get a cell phone several years ago, I was congratulated by the sales person who said that I was only the second person that he had ever worked with who didn’t have to pay a downpayment of any sort to get a phone.


Lax policies and easy credit allowed a lot of people to purchase things they shouldn’t have, but is this enough? Private Mortgage Insurance is for anyone who doesn’t have twenty percent down which was all but unavoidable as prices skyrocketed, unless you had a property to trade. Not many have saved $50 or $60 thousand and have still have a poor credit score. Paying more or buying less house would be a better solution. Housing prices have decreased so people can afford to buy more house if they are first time buyers.


The catch to the FHA’s announcement is that only those with credit scores lower than 580 would be have to pay a higher downpayment – 10%. The average credit score is in the upper 600s so that point is almost moot. Though by increasing the down payment requirement for more people, even those with better credit and halve the amount of cash that a seller could give the buyer at the closing (potentially decreasing the house’s selling price) more people might be able to afford a reasonably priced home.


Home ownership is still a tenuous situation. When people have had to pay more into a home and have more stake in it, they are more likely to stay, but if you lose only 3 or 4% of a homes value and walk away later because you can’t pay and don’t care about your credit score then that is an issue. For those paying 10 or 20% into a home with more equity, they would be more likely to stay in a home.


The stakes are different now that there is a recession, but even before that, when prices had increased, there were still may financial products offered that allowed people to effectively get money out of a home that they had never lived in. A higher downpayment would not solve all problems but may steer the market in the right direction.

Before giving money to a charity to help the survivors of the earthquake in Haiti, research your charity on Charity Navigator. This organization gives you lots of information and even some tips on donating to Haiti. (It is also a great resource for locating local charities).

When you are donating be wary of start up groups you have never heard of or email pleas. Phishers may try to take advantage of the situation and get your credit card number when you were just trying to help others in need. Eve if you get an email from a group, type in the URL yourself  before making a donation.

Though supplies are needed, donations of supplies is not the best route to go at this point because items such as water , clothing and food still need to be shipped. By donating to a larger organization that has been in existence for years and has some experience with disaster relief on a large scale.

When I went to the bank to take a fist full of dollars to the bank in exchange for a savings bond I was chatting with the teller who was looking at me askance since I had so many singles. I told her that I took them out of my wallet whenever I got some, because they didn’t fit in my wallet well. Her response was “ I always though about doing that but I always use my debit card so I never have any cash.”

Hmmmm… I wonder how many people are in the same boat if they use their debit cards more than using cash for everyday purchases. It may make me seem like a Luddite, but by using cash for daily purchases I am able to keep track of what I am spending. I know my limits and when I use a credit card or debit card sometimes I can lose track of purchases.

Back to the bank teller, I told her that by using cash and putting my dollars away that it was basically like free money and an easy way to save.

Saving is one thing but what is the purpose of saving money? Is the goal to reallocate for another purpose or saving money to actually put aside for short term or long term goals? Saving money on a haircut in order to afford that extra coffee isn’t allowing you to get ahead. Though I have never proscribed to the put the money aside that you have saved by using a coupon or by buying on sale theory, it could work for someone. Coupons and sale items makes your money go farther yet spending less on some items and pocketing the extra cash for unnecessary items can lead to unhealthy habits.

Banks are offering very little in the way of interest and yet are still vying for the consumers money through the way of fees. One way of inciting people to save would be to offer a greater interest rate. To get the best interest rates for certificates of deposit, you must have large deposits. If you are saving for a long term goal such as a down payment, college savings or other life event, then look at savings bonds, especially if you have more than five years until your goal. Five year CDs all pay less than the current amount that I bonds pay and the minimum for an I bond is $25 for an online investment and $50 for a paper bond. The drawback to this is that the limit for savings is $5,000 per savings account per year. This helps if people want to accrue a laddered approach to savings.

To get Americans to save, raising the interest rates would be a good start – not everyone likes the risk of the stock market and by saving money this would add some security to the money that people have. When your money will only earn 2% (at the most) on a $10,000 deposit it really isn’t a great encouragement to save, if you weren’t in the saving mode. Where do people put money if earning a tiny amount of interest isn’t incentive enough to save?

This could be where we are now savers, those who are truly interested in saving will save but those who need that extra push or want a secure investment for their liquid assets would like to know that saving is really worth it and not just a waste of time.

It’s that time again – when all of the gifts come from different places sending me well wishes and coupons for free desserts, entrees and other goodies via email. I’d say about half of the free coupons I may not use, but there are quite a few that I will use – such  as going to a restaurant that I really like and getting an entree for free.  Also, I get discounts at a couple of places that I frequent and purposely save Christmas and birthday money to get extra deals on things. To save money on items I would already buy, I don’t mind giving up my birthdate (and email address).