This is the 4th post on the topic of my mortgage modification. You may read the previous 3 articles at the following links:
- Eligible for mortgage nodification
- Qualified for mortgage modification
- More on mortgage modification
I met with my HUD mortgage counselor yesterday morning and finished the paperwork required to put the modification trial period in motion. I mailed the first check with the modified payment and FedEx-ed the paperwork to Chase Home Finance at lunch. The payment goes to a different address than the paperwork.
My original payment was $951/mo. and my modified payment is $691/mo. That’s a monthly savings of $260/mo and will more than cover the electric, gas, water, sewer, and solid waste bills. I’ll have $90-$100 left over to put toward groceries and out-of-pocket medical expenses.
This first payment starts my trial period and is due on December 1, 2009. The second payment is due January 1, 2010; the third is due on February 1, 2010; and the fourth and final trial payment is due on March 1, 2010. If I make all these trial payments on time, my mortgage modification becomes permanent.
According to the paperwork Chase sent, my modification won’t change after 5 years, or if it does, it will not revert back to my previous agreement. It will be at a lower interest rate and perhaps for a longer loan period, but the payment will not change significantly.
Apparently, Chase does modifications a little bit differently than other mortgage companies. I have to make 4 trial period payments instead of 3. I was not required to make a good faith contribution payment, and there won’t be a balloon payment at the end of the thirty year mortgage if I don’t pay off the principal by then. My loan will be extended until the principal is paid.
Bankruptcy Update
I had to go back to bankruptcy court last week to report on my mortgage situation. I caught up my second mortgage payments last week prior to court, and the judge continued my case until February before he agrees to sign off on my second mortgage reaffirmation. He wants to be sure I’m able to keep my house before he allows me to be saddled with a $20,000 secured loan for which I might no longer own the house.
Income Update
I picked up 3 more students by the second week of November, and they cover my monthly income shortfall plus some. I will be picking up some siblings of current students during mid-term exams in December. I’m still keeping up the extra marketing because I still have a few more time slots to fill. I’ll slow down assertive marketing when all my time slots are filled.
That extra money will go to paying my back taxes and allow me to rebuild my emergency fund. The taxes are the only debts I still owe. Everything else was discharged in the bankruptcy, and I’m turning the student loan over to my friend’s parents to handle.
This month, I will have about $200 left over even though I had to catch up the second mortgage and pay a reconnection fee on my phone bill from August. Future expenses won’t be as high since everything is now up-to-date.
I worked out a good deal with the IRS about monthly payments I can afford, just $130/mo. I’m free to pay more at any time, and if or when any refunds are applied to my account, I can renegotiate my monthly payment if I need to free up more cash. I may have to do that to increase what I pay to the state.
I haven’t worked out a deal with the state yet. I’ve been paying them what I can each month, around $30, and they accept my payments and haven’t started harassing me yet. I’m sure they will eventually, but as long as they are receiving payments, they will get to me after others who owe a lot more and are not paying at all.
I want to be clear. I’ll have about $200 left over after I pay the IRS, LDR, pay for the last prescription of the month, make the last weekly trip to the grocery, and replace the radiator in my car. It’s leaking at the top and will fail big-time soon. I’m okay for a little while adding coolant/water mix to the overflow tank when it starts getting low. I have an appointment Friday morning and will drop the car off at the shop Thursday night so they can look at it first thing in the morning and get the parts. I won’t need my car again until Sunday afternoon, so if they have to keep it overnight Friday it won’t be a problem.
Leftover money will go into my savings account.
Technorati Tags: bankruptcy update, income sources, mortgage modification, update
November 18th, 2009 Posted by joubess | Bankruptcy, Cost Reductions, Debt Reduction, Earnings Updates | no comments
I got some questions in the comments on my last post. I’m writing this post to explain them more clearly. I was going to write a long reply, but more people will read it if it’s a post. This is the third article about my mortgage modification experience and you can read the previous two articles here:
- Eligible for mortgage modification
- Qualified for mortgage modification
First of all, right now I’m only short $200 a month based on the modified mortgage payment. I am no longer several hundred dollars short. This month, last month and the month before that I was about $500 short based on my original mortgage payment.
You can’t make partial mortgage payments, so I saved what I had left over each month when I couldn’t make the full mortgage payments, and I caught up on the utilities on which I was behind.
I’m not posting my itemized budget because it’s private. You can assume I have the necessary expenses of a homeowner with one teenager and two dogs. There are few wants in the budget, and I do save for my son’s birthday and Christmas gifts. He doesn’t get a haul from me. He gets mostly what he needs, like clothes and shoes. His dad and grandparents take care of the wants. He is of the age now that if he wants something he goes out and earns the money himself.
He doesn’t have a car and he isn’t old enough to drive. His bike was stolen last year so we trash-picked a pretty good one and fixed the minor problems with it. We don’t rent movies or go to the movies, we don’t buy books that aren’t needed for school and we don’t partake of entertainment that costs money. We check out books and movies from the library (free). Our libraries have huge DVD and video collections of entertainment movies, TV series, and documentaries. If they don’t have a book I want to read, they get it through the inter-library loan program, though I may have to wait for it to get here.
I spend 5-6 days a week at the public libraries with students. There is no reason not to use the free resources available. They have plenty of free programs that are informative and entertaining on top of the usual library resources.
Ok, back to my income discussion. A couple of hundred dollars is one student, and the really heavy business of the tutoring year is about to start. Mid-term exams are in December before Christmas break. I had a college student who made up that income but she dropped the class and quit tutoring because she was supposed to take a different one. So I need one more student again.
Keep in mind my budget is based on my tutoring income, not on my online income. Online income isn’t stable and it isn’t much, but it does provide a small cushion. I reported it, but my HUD counselor agreed it wouldn’t be a good idea to base a budget on an unstable income source. Anything net business expenses from that income goes into savings.
A balanced budget for a modification is required. If you show that your financial situation is steadily improving and stabilizing at a point where you can meet all your obligations, and that your budget will be balanced in a month or two, they accept it.
The HUD counselor won’t call your mortgage company unless he or she feels you are financially stable or close to it and will make it within 30-60 days. The mortgage company won’t give you the modification if they don’t agree with the HUD counselor’s analysis. They both go over all the paperwork thoroughly. They verify your income, bank statements, and tax returns before they accept your budget.
My budget just went through my lawyer and federal bankruptcy court. I have no desire to go to prison, so I was not only 100% truthful about it, I have the receipts to back up my numbers, which agree with my bank statements.
A balanced budget isn’t required to discharge a bankruptcy under Chapter 7. It is under Chapter 13. Financial education classes about budgeting are required and I took those classes. Even though I don’t subscribe to all of Dave Ramsey’s teachings, his budgeting methods are very good, and I’ve kept a detailed monthly budget for a couple of years.
The HUD counselor and mortgage company did a second budget based on the modified mortgage payment, and I’m one student away from having enough to meet all our expenses including savings for an emergency fund and once-yearly expenses. Right now I don’t have enough to save for the once a year payments or reestablish an emergency fund.
I have enough saved to make the one-time contribution payment and the first modified payment required for my mortgage modification. I saved the money left over that would have gone toward mortgage payments for the 3 months I couldn’t pay (partial mortgage payments aren’t accepted).
My marketing plan isn’t a pie-in-the-sky plan that may or may not pay off. There are a lot of students out there who need a tutor and I need to find one of them. Every time I do any marketing at all I get a couple of students. I got 3 new students in October, but lost the one who dropped her class.
Getting one more student will not be difficult. I hope to fill my schedule completely this month and start a waiting list. I have one hour to fill on Mondays, two on Tuesdays, and two on Thursdays. My tutoring schedule for high school students is constrained to 5 hours per weekday (M-Th) because of the time school lets out and the time the libraries close, excluding homeschool students. They’re available during the day. I can add students who are willing to meet on weekends. I have one weekend student so far.
There aren’t enough high school and college math and science tutors to go around. We have the largest population in the state, a ton of public and private high schools, one large community college, a major historically African American university, and the flagship state university (LSU) right here in town. Getting my name out there is all I have to do to get more students.
I started with marketing to the families and schools I worked with when I was an employee of the tutoring company. I marketed to my local homeschool lists and I have one homeschool student. I have been branching out since school started and I’ve gotten students from referrals, web searches (Google local), and directly visiting some schools I haven’t worked with before.
I have students from Baton Rouge Community College and LSU. Friends who went back to college are students. One of my friends is the director of Student Support Services at LSU and she gives out my contact information whenever a student asks for a non-campus tutor. I start working with a student tomorrow whose mom was a previous colleague from when I was a chemist.
I get referrals from my previous tutoring employer. Her number is still all over town so she refers her previous tutors whenever people call and find out she closed her business. I worked with her for 3 years and she provides me with a highly respected reference as well as referrals.
I hope this answers the questions from the previous post comment. If not, please leave more questions and I’ll do my best to answer them.
Technorati Tags: bankruptcy update, income sources, mortgage modification
November 2nd, 2009 Posted by joubess | Bankruptcy, Cost Reductions, Earnings Updates | no comments
My bankruptcy attorney mailed me a fact sheet this week about HUD programs and mortgage modification. I visited the HUD website and filled out the questionnaire. The result was I am eligible to apply for the HUD program. I am working on getting all the paperwork done so I can turn it in Monday or Tuesday.
I must get the paperwork in and get the process going because I am two months behind on my mortgage payments. I missed August and September. The mortgage company told me to pay the oldest payment first, so I need to pay the August payment as soon as I can. I should have enough to make that payment within 30 days.
Being eligible to apply does not mean I qualify. That will be determined after I turn in my packet to my local HUD agency and they review it. Then they negotiate with my mortgage companies to modify my loans so the payments are more affordable with my current income.
Right now my income is $1950 per month and growing. I have another marketing campaign out to get at least a couple more tutoring students. I expect to get at least one more client in October, and probably two. First 9 weeks report cards come out on October 13, and parents of some students not doing well will seek tutoring for their kids.
On average, I’m about $500 short each month of what I need to meet all our expenses. I say “about” because I’m catching up on utility payments that got behind over the summer when I had limited income in June and very little income in July. In case you haven’t read previous posts, the tutoring company I worked for closed as of June 1, 2009 and we didn’t find out about it until May 21. I also earn different amounts from my online endeavors that can vary from $75-$250 depending on advertising revenue and sales commissions in any given month. Since it varies so much I treat it as a gift or found money.
Our water/sewer and garbage bill went up, then came back down by twenty dollars. I have no idea why. The phone bill will be lower because I was able to change our plan, and so will our cable/internet bill. I was able to make significant changes to that plan as well. They have more plans available than just a year ago.
They changed our electric meter from an analog to a digital meter in April, and ever since then our electric bill started going down by $20-$30 per month. We have the level billing option, so the amount we pay is a 12 month rolling average. That means our actual bill has gone down a lot more than that.
We’ve done a lot around the house to make it much more energy efficient. We put compact fluorescent bulbs in everywhere they make sense, turned the A/C up a degree, and went around the house and unplugged everything we don’t use or don’t use often. I started using “dryer balls” and I put all the clothes through the spin cycle twice in the washer. It cuts drying time about in half. Electric dryers use a lot of power, so running it half as much saves a lot of money.
I also had to replace my laptop in September with a refurbished machine I was able to get for $200 from a friend. I thought it was new, but upon careful examination, it’s a refurbished older machine. The repairs to my old laptop were not advised because of its age and were estimated to be well over $200. When they diagnosed it, it looked to be either a processor problem or a motherboard problem. Neither of those is worth fixing with the inexpensive cost of computers today. My old hard drive is still working so I can access it when I need it using an adapter (I already owned it).
Why replace the computer? I run my tutoring and online businesses using Quickbooks and email. Without a PC I can’t run Quickbooks. My accountant strongly advised me to get a computer, even if I had to borrow or rent one, because the IRS would find it fishy that 8 months of my business year are in a real accounting program and the other 4 months would then be on paper. So I asked around my group of friends until I found a deal I could manage.
Since we are starting over after the bankruptcy, we will be able to meet our expenses as soon as I get my income up about $500, even if my mortgages don’t get modified. Two new students will make that happen, and I’ll find at least two more students this month. My online income grows in small fits and starts, but I’m not counting on it to solve my income problem. What I make helps, and it grows, but I’m focused on my tutoring business because it is in demand and makes real money I can depend on.
If I don’t come up with two students in about 2 weeks, I’ll go back to delivering pizzas until I find them. I don’t think it will come to that. High school level math and science tutors are in big demand.
Technorati Tags: bankruptcy, mortgage modification
October 3rd, 2009 Posted by joubess | Bankruptcy, Cost Reductions, Earnings Updates | no comments
The economic slump is hitting big time here now. What I’m earning delivering pizzas and what I’m spending on gas to drive around are getting too close together.
Pizza delivery isn’t netting me enough money to keep doing it. People still tip, but not as well as they did a few months ago. Even though gas prices are down to around $3.65 a gallon, tips are only two-thirds of what they were in May. Tips are where you make all your money. I’m stopping delivering pizzas as of the end of this week. I would have been reducing my hours anyway since school is starting.
Not as many people are ordering pizzas for delivery. I used to go out with 3-4 pizzas on board. Now it’s 1 or 2 and the pace has slowed slightly. I work the same number of hours but make half as much. It’s about the same number of miles to deliver 3-4 pizzas as it is to deliver 1-2, so I’m paying out the same amount in gas money.
I was grossing $1800 per month on average and netting $1400 after taxes. I know that’s too much tax for that amount of pay, but I’m still earning at least $1200 a month in summer tutoring where no taxes are being taken out. I have the taxes taken out of the pizza delivery job instead of having to pay quarterly self-employment taxes for tutoring. Gas costs me an extra $250 per month to do the job, so my net was $1150. It was worth it for that amount of money, and often it was a couple of hundred dollars more than that. Now I’m only netting $575. That’s not enough. I can make that amount up by adding 5 hours a week to my tutoring schedule, which isn’t hard to do.
If you are delivering pizzas for extra money, make sure you’re actually netting enough to make it worth your while.
Tutoring Is Back
School started this week so tutoring will start ramping up next week. I have a GED student continuing with me from the summer and I have one new student scheduled starting Monday. That will ramp up quickly by the end of August. I’ve already warned all my regular students that if they want their pick of times and locations, they need to get on my schedule early.
I also got a raise from the tutoring company I work with (I’m a 1099 contractor), so that’s extra money for each hour I spend tutoring and that was effective August 1.
New Cost-Cutting
I thought there wasn’t any more I could cut out of my budget, but closing down my business officially has freed up some more cash. I shut off the business phone and that saves us $40 a month. I had to keep the phone on until I could file my form ADV-W with the NASD.
Tuition for my son’s homeschool curriculum will stop next month and that will save us $66/mo. I wrote my own curriculum for this school year. It’s not that hard knowing what I know from teaching high school kids from all over the city. I know what they take and what they have to know before they get into each class, so coming up with a 7th grade curriculum wasn’t that difficult. I was able to get all the books we need from the last library sale for about $15. Libraries often carry textbooks and other very good how-to books, like the “For Dummies” series. They sell old editions when new editions are purchased. Check out your next library sale and pick up some real bargains.
I’ve been reducing the number of features we have on our home phone as time has progressed, and I’ve decided we don’t need caller ID anymore. That was the last to go. Our regular home phone bill used to be $80/mo when I started cutting features last summer (2007). Now it’s down to $20/mo. I screen calls the old fashioned way, using the answering machine. I only pick up when it’s not a collections call. Otherwise the machine takes messages and I call back when I’m ready.
The last big cost cutter was to do everything possible to extend the gas mileage of the Honda and consolidate trips as much as possible outside of pizza delivery. I was able to reduce our gas consumption by 1 whole tank per month, saving us $50.
Totaling the savings up: $250+$50+$40+$66+$15 (home phone) = $421
That’s another big reason I’m stopping the pizza job. Excluding the $250 in gas money, we’re saving $171 extra now. My tutoring income plus the savings will more than make up the $575 my take-home pay will be reduced.
Another Side Business
I’ve also been working on another side business. I’ve been helping local people and business owners set up their own websites using WordPress. I got into it from the suggestion of another blogger. When I sold my red beans and rice recipes blog, the guy I sold it to needed help with transferring everything over to the domain on his server. I helped him as part of selling him the site, but I’ve found a couple of small businesses that want a web presence but don’t want to spend around a thousand dollars having a professional designer set it up, and then them not be able to make changes easily. Those companies also charge too much money each year to keep hosting your site. The cheapest I’ve heard about was $250 per year for one site. That’s criminal! It costs me $230 per year for domain name registration and hosting for 10 sites. That’s $19 a month total. I more than make that up with a few affiliate product sales.
I’m making around $250 per WordPress site. I do most everything for them. I set up the domain name and hosting, install WordPress and help them pick out a free theme, or they can browse around Google and get a paid theme if they want. I set up their site with the theme they choose, add the plugins they’ll need, set up tracking (Google Analytics), teach them what the main statistics mean and show them how to use the WP administration panel. I also set them up with an RSS feed and get them a FeedBurner account.
Once they go through WordPress with me and then over the phone when they make their first change on their own, they’ve got it down. One website only costs them $380 to set up and host for the first year, then hosting and domain name registration will run them another $132 per year from then on. They can add more domains for another $11 per year each. I set them up on hosting that allows unlimited domains so the cost doesn’t go up if they add a site.
This is just something I’ve picked up on the side since I’ve gained so much experience with WordPress over the past year. I’m going to start marketing it locally, networking with my local business owner friends and acquaintences. They’ll let me leave business cards or fliers on their counters.
I haven’t run into anyone who wants an autoresponder system yet, but when I do, I’ll set up AWeber accounts using my affiliate link and earn a monthly commission on top of that. I set people up with hosting that I’m an affiliate for and I earn a monthly commission there as well. It’s not a lot, a dollar or so a month on each account, but after awhile it all adds up and I don’t have to spend a bunch of time and no money getting those income streams to flow.
If you’re a Baton Rouge local and want a website set up that you can run yourself that doesn’t cost you an arm and a leg, please drop me an email at joubess at gmail dot com. Please leave your name, business name and phone number, and we’ll get together and get you set up.
Technorati Tags: pay raise, pizza delivery, side business, tutoring, WordPress
August 13th, 2008 Posted by joubess | Cost Reductions, Earnings Updates | 3 comments
