July, 2009

Stay Tuned Next Week…

Although Money 911 was canceled today, stay tuned to NBC’s Today Show next Wednesday at 9am EDT for another round of answers to your money questions. Have a money question you’d like an answer to? Submit it by clicking here.

Money as a Motivator

What motivates you? Is it money? Is it something else entirely? And if it is money, how much will it take to get you to take an action you might have otherwise avoided?

When the action in question is losing weight and keeping it off, the results of a new study seem to indicate that money may not do the trick. Here’s what went down according to The New York Times:

“Researchers studied 2,407 overweight and obese people enrolled in weight-loss schemes at their jobs. Participants were divided into three groups. The first received $60 for keeping a 5 percent weight loss for a year. The second agreed to pay about $100; the money would be returned if they lost 5 percent of their weight, and they would get bonuses for losing more. The third, a control group, was offered only $20, a reward for staying in the program for a year. The study , published by the National Bureau of Economic Research, found that money had very little effect. The group that was offered $60 lost an average of just 1.4 pounds, while the controls lost 1.8. Those who made the $100 deposit dropped an average of 1.9 pounds more than the controls, but, the authors write, people motivated enough to risk their own money would most likely have lost weight with any program.”

Personally, I think the problem with this study was that there wasn’t enough money at stake. More…

MSNBC/Carlos Watson

Off The Hook?

This weekend I was on MSNBC with Dylan Ratigan and Matt Taibbi (who recently wrote this piece for Rolling Stone magazine) discussing whether the government has let Wall Street off the hook too easily.  Watch the video below for my take:

Ask Jean Thursday: A Bright Side to the Hike in Your Monthly Minimum

To SheSelz…who wrote:

I also am a customer of Chase. I have never paid late in 30yr. They have just raised my monthly minimum payment from 2% per month to 5% per month, an increase of 250%. My interest rate is fixed at 3.9%. After reading the previous blogs, I’m not sure if I should call them or not! Does anyone else have other reports on how they have been treated on this type of problem? Is this problem only been occurring with Chase or other banks as well. Obviously they found the loophole that I missed in all the fine print!

Before you resort to calling — and we’ll talk about that in a moment —  I want you to try to think of this as a gift rather than a punishment (and I know it feels like a punishment, with a credit card this cheap, the temptation is to use it for all expenses you have to carry.)  But let’s say you have $10,000 in debt on that card.  If you pay it off at 2 percent a month — at the 3.9% interest rate without charging anything else — it’ll take you 55 months. BUT if you can come up with the $500 it takes to pay the 5 percent a month, you’ll get out in 21 months. And save a boatload of interest in the process.

What if you can’t? What if it’s impossible to come up with that $500 a month?  You simply don’t have the cash and you don’t have a way to get it?  Then you call and you tell them that and try to negotiate something in between.  Understand, they may cancel your card as a result (that’s their prerogative) or only be willing to cut the minimum so far or say no. But it’s better for your long term financial health if you can rob from the various Peters in your life to pay this particular Paul.

New And Improved!!

Okay, so you don’t usually get a headline like that on a financial story unless it’s an out and out scam.  Today is different.  Two things I want to tell you about may actually help you get through this month (and those following) feeling less squeezed than in the months before.

1. 125% Loan To Value

One of the big frustrations I’ve heard about — from some of you indeed — in the attempt to refi a mortgage because you’re feeling squeezed by the payments is the inability to qualify for the Making Home Affordable plan.   As originally drafted, it was tough.  Your loan not only had to be underwritten by Fannie or Freddie but you could owe no more than 105% of the appraised value of the home.  Due to the fact that people overborrowed to such a great extent and home appraisal values had fallen similarly, that was a high bar to scale.  Well, it’s been revised.  Now you can owe up to 125% of the appraised value.  CNBC covered the story pretty comprehensively here.  The bottom line: If you’ve tried and failed, try again.

And note: Mortgage rates fell again this week.  The 20-year-fixed rate loan is back at about 5.3%. More…

Money 911

Rent or Own?

This is an ongoing debate, and the answer, of course, depends on individual circumstances. But on this morning’s Money 911, we hashed it out for Susan, a caller from Michigan. Watch the video for more: