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A Growing Problem ... 
... How to Keep Your Home Affordable

by Roy Primm

 

 

 
 (Note: Click on double underlined words for extra information) 

While buying the home I sought
I found myself in a unique spot,
I stop managing my money
Then my credit turned funny
Will I be able to afford the home I bought?





What's one of the biggest threats to African American homeownership? It's not just the affordability to buy a home - its the affordability to keep a home.

Many homeowners find themselves behind a few years or even months after buying their dream home. 

People who managed their money like a miserly accountant to buy a home, start spending money like a drunken sailor after buying the home.

Yes, besides the problems African American homeowners are having because of bad loans, there's another problem. That problem is homeowners who don't manage their money properly after they buy the home. This results in their home no longer being affordable. This is a growing problem especially among African Americans.

According to Federal Housing statistics not only do African Americans own the less percentage of homes than any racial group. African Americans also have one of the highest default and foreclosure rates after they buy the homes than any other racial group.

Here's the five biggest threats that sabotage African American homeowners ability to afford their home - after they buy it.

1. Beware of Credit Card Balances.

Credit card mismanagement continues as one of the biggest causes of financial problems many families face. Overextended credit card balances looms as one of the biggest threats to African American homeowners.

Oh it's so easy to charge it when you see that item that makes your heart flutter and your toes tingle.

Yes, it's much easier to charge it now than to budget or save for it. But the consequences can result in the "credit card statement shock" millions of people experience each month. I've often said, "show me a home default or foreclosure and  I'll show you over extended credit cards close by." 

So, one of the best ways to make sure you can continue to afford your house after you buy it - keep your credit card  spending under control.

2. The Jones Factor.

Yes, keeping up with the Jones is a constant battle most people experience in our consumer driven society.

Advertisers continue to lay there message on thick and heavy to take advantage of our inner desire to keep up with the Jones or  to "Be Like Mike."

They do it with slogans like "Be the first on your block to have a......!" Or "Don't be the last to own a ........" And of course my personal favorite "Women/or Men will love you when you buy a ......... !"

One of the biggest temptations we consumers have is to keep up appearances. "It’s shocking how many people living paycheck to paycheck who look like their millionaires", states James Tate, Certified Public Account.

So, another way to make sure you can afford your home after you buy it is to ignore the "Jones Factor".

3. Does Insurance Have you Covered?

A recent study revealed two out of every three homes nationwide sit under-insured, according to a survey by Marshall & Swift / Boeckh.

If your house burned down like many homes of the recent Southern California fires, chances are you won't get enough money to replace it. This same scenario happened with many African American homeowners whose homes flooded because of Hurricane Katrina.

A surprisingly large amount of homeowners find themselves uninsured or under insured when they experience a flood or other natural disaster. Forcing them to dig into their own pockets for some of the rebuilding cost.

In addition, many homeowners find out after their house floods they're not covered for flood damage. Many home owners assume their policy covers them for flood damage.

With constantly rising building cost and the rise in remodeling and home improvements - it's easy to find yourself underinsured.

So, make sure you're not underinsured should the worse happen.

 
4. Negative Amortization Loan that Adjust More Than Your Income.

This is one of the one of the biggest obstacles millions of homeowners face now or will soon face. 

I don't have to tell you the numbers of homeowners who can no longer afford their home because of a loan or a future loan adjustment.

The fall-out is at historic levels. The only choice most homeowners have in this situation is to refinance or sell if they can.

5. Buying Items on Impulse - Neglecting the Little Things Adds Up.

Buying small impulse or spur of the moment merchandise as a habit can add up to major dollars if you're not careful.

That $5 Latte you spend each morning can add up to over a thousand dollars a year. Now multiply that figure times other impulse items you buy. You can see how quickly those numbers can add up without you noticing it.

There is an old saying, "small foxes can spoil the vine". Which means little things you might consider as insignificant can add up to something that can cause major destruction - if left unchecked.

A good exercise is to carry a small notepad around with you for the next 30 days and write down everything you spend money on.  It’s  surprising what this little spending exercise will reveal to you.

Yes, with the spend now and pay later attitude of our society, the ability to afford what you've already purchased is becoming a bigger challenge. With the cost of living rising faster than paychecks more people who neglect proper money management could start to feel the squeeze.

This new “impulse buying” attitude has given birth to many new businesses and industries.
 
Businesses like eBay, and other online auctions, succeed because of people who need to sell what they can no longer afford to keep. The Penny Saver newspapers succeed because of the people who need to sell what they can no longer afford to keep.

In addition, for those who can't or don't want to sell what they can no longer afford they can always store it at Public Storage. Public Storage is one of the fastest growing companies of it's kind. Why? Because of more people's desire to buy and accumulate more things than they can use, store or afford.

The best way to curb or control this urge to buy on impulse is to always have a spending plan or shopping list and stick with it. Writing down what you will buy will force you to think about it, even if only for a few seconds, this will help you control impulse spending.

With today's turbulent and unpredictable economic climate it's important to run your home and your life like a business.

In fact, if you own a home today it's probably worth as much or more than many small businesses.

By following these simple tips you'll have a better chance of enjoying your home for many years to come. Because you'll be one of the many who will meet the challenge of keeping your home affordable.

 


 

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