My Tax Dollars at Work

A critical piece of the Obama Administration's Financial Stability Plan is the Making Home Affordable program, a plan to stabilize our housing market and help millions of Americans reduce their monthly mortgage payments to more affordable levels. Having looked at refinancing our mortgage a few months ago, but not finding the right deal, I was interested to see if we could benefit from this program. It’s designed to help homeowners get more favorable loan terms in scenarios where their home has lost value. That is the scenario we're in. A lot of lenders won’t refinance a loan if the value of your home is less than the loan amount, it’s simply a matter of math; this program looks to help alleviate some of that. There are two parts to the program. The first is Home Affordable Refinancing, which helps borrowers refinance a loan backed by Fannie Mae or Freddie Mac. It’s designed for people who are current on their mortgages and are unable to refinance because the value of their home has fallen by too much. The second part of the program is Home Affordable Modification, which assists in the modification of a loan, rather than a refinance. It’s designed for people who are “struggling to make their monthly mortgage payments.” We're eligible for the refinance program. I called my lender a couple of weeks ago and requested an evaluation of my situation. They called me back today, and after spending about an hour on the phone, I had myself a new 30 year fixed rate mortgage that is only about $20 more a month than my current mortgage payment. It's an upgrade from my 5/1 ARM. I'm only in year two of the 5/1 ARM, but I wanted to take advantage of the program and lock in a low interest rate for 30 years. An opportunity like this doesn't come along everyday. I'm usually not happy with the decisions of the government, but I will make an exception this time. Thank you President Obama. I'll give you a man hug next time we hang out.

Monochrome

The Redskins played the Steelers on Monday Night Football. The game was significant for two reasons - 1. A Redskins loss means that Barack Obama wins the election and 2. for the first time in team history, the Redskins wore a burgundy monochrome uniform. Burgundy jersey with burgundy pants. They looked awesome. That was the best part of the game for me. They got their asses handed to them on national tv, but they looked great doing it. The uniform feedback on the internet was decidely negative, but from the articles I read, the team liked it and the burgundy monochrome uniform could show up again. I hope so. I'm obsessed with football aesthetics, especially when it comes to my favorite team. The Redskins 2007 Lombardi era throwbacks with the Packers style helmet left a lot to be desired. Some NFL teams have a third alternate jersey. The Redskins do not. I imagine a killer looking yellow gold jersey with burgundy numbers. They would be the only team in the league with a yellow gold jersey. Or bring back the yellow gold pants, like they wore in the '70s. Danny, you are a master of marketing. Please create the gold alternate jerseys. I'll definitely buy one.

The Martingale

There is a gambling strategy called "The Martingale". This doubling game offers something for nothing—certain profits, with no risk. Hence its appeal to gamblers. In a general sense the current economic situation was caused by Wall Street using the Martingale strategy. The carefully synthesized financial instruments now seeping toxically from the hulls of multiple investment banks are vastly more complicated than the Martingale. But they suffer the same fundamental flaw: They claim to create returns out of nothing, with no attendant risk. That's not just suspicious. In many cases, it's mathematically impossible. Read the article for the gritty details. It's fascinating.

Dollars & Sense

I don't normally blog about politics, it's just not my style. But with the state the U.S. economy is in, I feel like offering my $.02 (which is worth a lot less against the Euro). First, the housing crisis. There is a lot of effort by the government to find a fix for our current housing crisis. I realize that something must be done to help people in the unfortunate situation of losing their homes to foreclosure because of the overall impact on the economy, but my emotional reaction to this is very different. Why should my tax dollars be bailing out someone who bought beyond their means? I think it is ridiculous that builders who in the past five years have been making money hand over fist should be given tax breaks. And like most policies it does not help those who are fiscally responsible and live within their means, like me and my family. Why not a tax break for all homeowners instead of just those who buy foreclosed homes? Second, rising gas prices. Prices at the pump are skyrocketing. It's outrageous. High gas prices is one of the major catalysts in me getting rid of my car. Tawny took only premium, which is around $3.80 in our neighborhood. Just putting gas in Ruby (our Xterra), which takes regular unleaded, cost us around $60 yesterday to fill the tank at $3.40 a gallon. Chronic is going to ride the Metro to school starting in the fall and is going to start carpooling to work on Fridays. People are going on vacation closer to home because of the weak dollar and high gas prices. That's a smart idea. Please pass along any creative ideas to conserve gasoline. Third, the economic stimulus checks. These checks are supposed to stimulate the economy by encouraging people to spend the money. Do yourself a favor and save that money or pay down debt. But retailers are making that very hard to do. They want a slice of the pie. Major retailers like Sears, Wal-Mart and Pizza Hut are all offering "economic stimulus" sales, cutting prices 10% to 30% in May when the checks begin to be mailed out. I think you'll see every retailer try everything they can to reach into consumers' pocketbooks. Resist the urge to spend that money. Think long term, not instant gratification. Put all this together and the outlook is grim. Pray for things to turn around.