Jeff Peltier is a guy I met via Linkedin. He invited me to be a guest on his show this week to share my faith and to talk about my book. Jeff is a very interesting man with a great consulting business in addition to his radio show.
Check it out here, you may fast forward on some if you like.
A baffling Mortgage loan situation
Today a business client told me this story about his mortgage loan. I will make up some numbers to illustrate the situation.
He has a mortgage of $200,000 on a home that is valued at $175,000. His payments are current with on the mortgage. He wants to sell the home in order to move to a different location closer to schools and work. He has the house on the market but will not get enough to payoff the mortgage so he contacted Wells Fargo who holds the mortgage.
They told him he has two options, either pay off the mortgage in full or do a short sale and they will take a discount for the $25,000. He really wants to pay off the whole liability but cannot come up with the shortfall so asked if he could sign a note for the difference and pay it off over time which he can do given his income. He was told they would not do that so I called WFC myself and got confirmation of that.
My concern is that of a shareholder of WFC. I have been in corporate finance for many years but have not been involved in personal loans much at all. It appears to me that if WFC is going to accept a short payment they will charge of the shortfall and forget it. They told me they would not take any notes from anyone for the shortfall because if the customer filed bankruptcy they would not get the money. My argument was, what difference does it make? Would you rather charge off the difference than take a chance on a recovery over time? The latter makes a lot of sense to me as the best solution to this problem. WFC has a lot of these problems, why wouldn’t they just charge off the shortfall, take a note for it and when any payments come in simply apply them to their reserves? Isn’t this a no brainer?
I think a lot. Sometimes I come up with good ideas, other times they fail me, but I keep on and write about some of them.
Lately I have been interested in the pursuit of happiness as allowed in the Declaration of Independence. I really like that concept and also believe that it is a pursuit, not an endpoint. So I conclude that we need to work at it.
Lately I have read about many people being dissatisfied with their jobs. It seems rather strange to me given the high unemployment rate that we have in the country as well as the notion that so many are unhappy. I have been happy in almost every job I have had, except one. I was laid off in my first job for lack of business and was picked to go in the second round for lack of skills! I eventually got a job in banking, a field that I never had any interest in at all, but I had a young family to support so gladly took it. I was determined to never get laid off again so changed my attitude from “what can my employer teach me?” to what can I do for my employer that will make the bank more successful. I think that attitude is the basis for the ensuing success I have had since then.
So, if you don’t like your job or employer I have some concepts for you to consider in evaluating your position. I am not picking on anyone with these questions, I just have come to believe that some of the problem is our own attitudes.
Here are some things you may wish to consider.
Maybe:
As I said, please don’t take any offense to any of these ideas. They are intended to just make you think.
Maybe you would like your job more if you approached it differently?
Now don’t exit right away, I am not going to preach! But I do want to share an interesting story about survival and careers from the Bible. I believe it is true and that God orchestrated it, but will tell the story in secular terms just because it is fascinating. And, you may find that the Bible does have some lessons for us.
Genesis recounts the story of Jochebed, who was Moses mom. Jochebed was a Hebrew woman who had a child named Moses. At the time of his birth the Hebrews were enslaved to the Egyptians and were very abused by them. Because the Hebrews were multiplying the Pharaoh became concerned about an insurrection by the Hebrews, so he ordered that the first born sons be killed by throwing them in to the Nile River. Many were killed in this process, but Jochebed hid Moses and concentrated on finding a way to let him survive, rather than be another victim. She put him into a basket and sent him down a stream to where some Egyptian women were bathing and would discover him. They did and instantly fell in love with the baby and kept him for their own. They realized that they needed to nurse him and Moses sister, who had been watching them., came forward and volunteered her mother to take care of the baby. They took her in and Jochebed nursed her own child for them.
Moses was raised as a privileged Egyptian and in a worldly sense had it made. One day he discovered his true heritage and began defending his people who were being beaten and treated poorly by the Egyptians, and was forced to flee Egypt for his personal insurrection. In a few years he returned to Egypt commissioned by God to lead his people out of captivity which he successfully did. There is much more to this account in Exodus that is equally fascinating.
But, we can learn quite a bit about just this snippet from the Bible. Even in just a secular sense.
Jochebed was a survivor! While her friends were probably wallowing in pain and tears about losing their babies Jochebed was keen on Moses’ survival and came up with a creative plan to make it happen. She had knowledge of women and their love for babies so let the Egyptian women “discover” Moses and fall in love with him. She knew Moses would require nursing so sent her daughter to volunteer her nursing services to them for Moses care. I don’t know if she was paid, but probably got some food for her service so in actuality got a job out of taking care of her own child! How creative is that? Focusing a personal survival solution saved her child rather than focusing on her victim situation which certainly was justifiable.
One last brief lesson from this would be why did God appoint Moses to lead the Hebrews out of Egypt? Or, if you don’t believe this, then I ask how did he prepare for doing this?
He had no experience as a leader and had only recently discovered his heritage. He had been on the wrong side of the issue for a long time and would have to earn his trust from the Hebrews. He did it by proving his intent through his actions in the process of negotiating with Pharaoh.
His biggest asset for the job was his heritage. He may have been the only Hebrew who could walk into the palace and get an audience with Pharaoh. He probably had relationships with many people in the palace who allowed him to come in and get to see Pharaoh directly. He used his contacts well and achieved his mission by getting in the door.
Survival lessons from this story:
Survival may be very different in today’s complex world, but I think the fundamentals are the same. We need to learn them and apply them!
Don’t think you can do it? Maybe you need God too!
I just completed a 1 hour interview with Felice Gerwitz, Media Angels, on her blog talk radio program. I had never done something like this before but it was a great experience for me. If you like, check it out here:
Continue reading “My blog talk radio interview with with Felice Gerwitz, author and book coach”
I have worked with 100’s of small businesses and have seen a few things that cause financial problems for them. I think they are very similar to individuals who have problems.
First, some businesses take much more personal compensation than the business can support. Sometime they do this to avoid corporate income taxes but do not tuck it away for liquidity when they need it. Individuals are doing something similar if they spend too much of their money on unnecessary things that are financed by some cash but more debt.
Second, some businesses have too many family members on the payroll and when times get tough have difficulty reacting. Individuals have this problem by spending more than they can afford to give their children all the things they want, rather than they can afford. “But is for the children”
Businesses may buy real estate above their needs in the interest of building equity for retirement rather than considering the costs for the business and the risks of long term debt. Individuals sometimes stretch for a house loan as they believe their income will go up and they can grow into a new mortgage.
Business sometimes are lax on their accounting procedures and financial reporting. They may ignore that information until it is too late. Individuals may have no clue to their financial position at all.
Businesses may borrow as much as they can by leveraging every asset they have to do so. Some make it doing this, but only if they are very profitable and reduce the debt over time. Banks don’t like permanent working capital loans. Individuals do it by over extending credit cards to the point where they are perpetual.
Business may ignore what is happening to demand for their product and continue to believe they can sell what they have. Individuals may not see changes in the market for their skills and do not invest in learning others before it is too late.
Businesses may become complacent with a high concentration with one customer. When that customer goes away, they scramble to replace it. Individuals do the same by trusting that their employer will always have a place for them and don’t watch what is going on at work.
Many of these issues are considered warning flags by credit people in banking. When they occur they watch their loans more closely until the business proves they can make their decisions work. These are not just flags for bankers, businesses and individuals should also understand the risk of what they are doing in their decision making.
Are you interested in writing and publishing? You are invited to join me, Felice Gerwitz, author of “Information in a Nutshell: Writing and Publishing,” along with my guests as we explore the exciting world of becoming a published author. This broadcast airs every Monday afternoon at 3:30 ET. I will challenge you with information and inspiration as you work closer to obtaining your dream….that of becoming a published author.
I connected with Felice on Linkedin and she has been a great contact and friend for me. I have used her consulting services a bit and she helped a lot as she knows what she is doing in the publishing field. She also is a fun person to work with I value our internet friendship very much. She invited me to be on her radio show this Monday to talk with her about my book adventure. Here is information from her site about Monday:
Rob Severson grew up in Harmony, Minnesota, and graduated from Luther College. An “average guy” and academic underachiever he decided to write a book that shares how he overcame obstacles to personal and professional success by adopting basic, proven principles. Learn how Rob took an idea and turned it into a book for his two daughters, that has impacted the lives of many people. Rob will share his adventure as a new author and the ups and downs of finding a niche market and selling books
I recently wrote on social injustice reflecting on what some churches promote. I believe their intentions are good, but question the result. I also received some comments that these churches think the government has to do the entitlement stuff because the people in their churches do not give enough money to do it.
If I were in a member of a church that is in to social justice, and re-distribution of wealth I could have several reactions. First, I would be convinced that the government has a all the responsibility for helping people and that it can and should be done by them. Second, I would believe that the taxes I pay are for this purpose and therefore I do not need to give much to my church. Lastly, I would be convinced that only the wealthy are responsible for helping people as they pay the most in taxes. I would also quickly buy in to the idea that only the wealthy are greedy and that I am not because I am not wealthy.
So, I would put $1 in the offering plate and feel good about it. Is that the desired result? Shouldn’t I be taught about greed also? “Feel good” ministries may bring in lots of people, but are they teaching people to be unselfish? Many think that is our main social problem today in Wall Street, big business, government and everywhere. I think the best place to teach these values is in church. Are they?
Except for the really rich, we all need to watch our spending. Money management is a very simple concept; spend less than we earn! Easy to say, but difficult to do especially at various stages of our lives.
When we are young we are like a growing business, we need to invest in homes, our families and other things for getting established. This makes it almost impossible to spend less than we earn, so it is necessary to use debt to build our lives. It is also necessary to establish priorities for what we buy with cash or debt.
If we prepare a budget early on it will help us get control of our necessities very quickly. If we are honest we discover that it doesn’t take a lot of income to just survive. Then we need to focus on making enough money to pay for them and have some money left over, or a profit as a business would call it. Our profit should be invested in a backup fund and other things we need to build our lives and live free. This is a very over-simplified financial model but it is a very fundamental one.
Prioritizing our expenditures that are not necessities is where we often get into trouble. Over spending results in high credit card balances that are difficult to be free of and only makes it more difficult for us to invest in the things we really want, such as a house and improved living standards.
So, how do we establish priorities on how we use our discretionary cash? There are many resources for guiding us in making these decisions, but I have another way to look at it. We should prioritize our discretionary spending on what will make us happy!
My definition of happiness it to have inner peace, an other’s centered purpose, and to make a living that gives us freedom. If we have credit cards that are over extended we will worry and have stress that inhibits our inner peace. If we focus too much on just ourselves, we will only see tons of things we want for self fulfillment. We may also fall in to envying others for what they have and seek to get those things for ourselves. We can become greedy, even if we are not wealthy. We often fall into a “pity party” when we get to self centered and believe we are “victims” as we are not paid enough, and don’t have as much money as we deserve. This will only take us down and destroy our inner peace.
If we learn to be thankful for what we have and understand how much others don’t have, our attitude can change. We can even consider using some of our discretionary money to help others.
So our spending priorities should be based on a higher level, that of having real happiness; inner peace, purpose and freedom that comes from controlling our debt. Some would call this avoiding instant gratification, I call it seeking total happiness.
With each expenditure we make we should ask ourselves the simple question, will this really make us happy?
Social injustice
I heard this term a lot in the 60’s when I was in college but didn’t think about it too much as I was doing other things than protesting stuff. As it keeps coming up I looked it up on Wikepedia to learn more about it.
There is a lot on there, but the parts that I picked up on were the concepts of re-distribution of wealth for the collective well being. It has its roots with communist and socialistic theories. That sounds good to many and I wonder why. (I am not one of the wealthy by the way)
I think it is very well meaning to help those in need. I think we should all help people and organizations that are helping people make their way in the world. I do it by volunteering and donating money to places that do this.
My concern is that the movement seems to be based on the concept of having wealthiest people do this, and do it via taxation so the government can do it. I have two problems with that. First the government is know for inefficiency, bureaucracy and wasting resources. It may have gotten to big to manage. Second, don’t we all have a responsibility to help the poor?
Many churches have bought in to this idea also under the grounds of helping poor. I question their involvement in this movement and wonder if they are not simply abdicating their responsibility in this to the wealthy folks rather than contributing themselves. There are many millions of church folks in the country who could make a big impact if they each gave only a few dollars to do so. Using the government to help the poor only leaves the responsibility to 1/2 or less of the population. I also think it may be counter to what churches teach as it makes government one’s higher power rather than God.
The other issue for churches is the experience the apostles had that is recorded in the New Testament. They pooled their resources and set out to live on those funds and to continue to pool their income as they spread the gospel. A problem developed with some not working so Paul admonished them and told them that “if you don’t work you don’t eat”. I don’t think they were bad or lazy people, they just found that they could do what they wanted and others would take care of them. Is that happening today?
I firmly believe we need to help the poor who cannot help themselves, but we really need to focus on helping those who can learn how to make a living. We are robbing many of the self esteem and joy that comes from success, how modest it may be. Why don’t we focus our energy on educating people on making a living rather than promoting a new economic system that has not worked well wherever it has been tried? We have the best example of how poor can make it with our President Barack Obama. If he could make it this far, why can’t we teach others to do what they can rather than build entitlement systems that take their focus off how to do it rather than “what I am owed”?
