I How to Live on a Budget and Love It
Volume 21 Issue 5
In This Issue ...
How to Live on
a Budget and Love It . . . . 1
No More Excuses!. . . . . . . 4
How to Determine Your
Average Monthly Income . 4
The Case of the Stinky
Coffeemaker . . . . . . . . . . 5
Make Your Own
Household Cleaners . . . . . 5
Yes, You Can Fix
that Leaky Faucet . . . . . . . 6
Ready to Jump Into the
P2P Pool? . . . . . . . . . . . . . 8
DPL+Mvelopes=FREE! . . . 9
HARP 2.0 Mortgage
Refinance Loan Program. 10
7 Money Rules Offer. . . . 11
In Every Issue ...
Letter from Mary . . . . . . .2
DPL Picks . . . . . . . . . . . . .3
Tiptionary . . . . . . . . . . . .7
Dear Mary . . . . . . . . . . .12
on the News . . . . . . . . .14
Our Purpose ...
To provide hope, help and realistic
solutions for individuals who are
committed to financially responsible
and debt-free living.
Bringing Dignity to the Art of Living Below Your Means since 1992
How to Live on
a Budget and Love It
know what you’re thinking. Just the
thought of the word ‘budget’ is like nails
on a chalkboard. I know the feeling.
For many years I wouldn’t have anything to do with a budget because I
couldn’t stand the idea of anyone—or
anything—telling me how to spend my
money. And where did that get me? Into
one big financial mess.
Every month, when I ran out of
money, I would turn to MasterCard and
Visa for a bailout. Really bad idea.
What I learned from going through
that experience and finding my way back
to solvency is that, as much as we may
loathe it, a budget is the ticket to financial happiness―not the straitjacket I
feared it would be. I’ve come to prefer to
call this a “spending plan” rather than a
budget, but honestly the terms are interchangable. It’s just a way to pre-spend
your income so that every dollar is
assigned a job to do.
Like the blueprints to build your
dream house, a spending plan shows you
where you are and how to get where you
want to be. It’s the place where you
spend your paycheck on paper even
before you cash it.
A good spending plan gives every dollar a specific job to do. Once you have it
just the way you want it, the plan
becomes a handy road map for keeping
your finances on track.
So, take a deep breath and let’s walk
through the basics of creating a simple
budget, or spending plan.
Step 1: Write down your total takehome monthly income
This is the easy part. Jot down what
you earn. Because many expenses are
billed monthly, it makes good sense to
use monthly income to create your budget. Use the conversion table on page 4 to
figure out your average monthly income.
Step 2: Write down your essential
Start with fixed bills like rent, mortgage, car payment, credit-card debt and
insurance, then factor in other monthly
costs that are always the same. These
are your essential fixed expenses.
Step 3: List your essential variable
You know you’ll have these bills, but
the amounts vary. Examples are your
phone, utilities, food, household expenses, gasoline, medication, public transportation, shoes and clothing. You can
assign an estimated amount to each
based on past experience, rounding to
the closest $10.
Step 4: List reasonable amounts for
This includes entertainment, eating
out, hobbies and other ways you spend
money on a regular basis.
See BUDGET page 4 —
Founder and Editor: Mary Hunt
CEO: Harold Hunt
General Manager: Cathy Hollenbeck
Editor, Digital Content: Cathy Hollenbeck
Sales and Marketing: Nick Bautista
Fulfillment Manager: Josh Hunt
Customer Care Manager: Christy Rocha
Debt-Proof Living is published 12 times a
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My Dear Readers,
When Gordon Gekko, the main antagonist in the 1987 film "Wall Street,"
declared in no uncertain terms that
"greed is good!" people flocked to the theaters. And cheered. But it was just a
movie. Please don't base your belief system on a movie line that might have been
memorable and entertaining, but dead
wrong. Greed is like a cancer that when
left untreated can destroy individuals,
families, businesses, governments and
Greed makes financially ignorant people putty in the hands of the consumer credit industry. My ignorance about
credit and debt, plus my skewed logic that somehow I could have all that I
wanted now and it would somehow work out in the end, set me up to be
greed's dream client.
Credit was my accomplice. And choosing that course in my life landed me
in a pit of financial despair. It took me 12 years to ruin my life and 13 years to
come back. That's 25 years just to get back to square one! I shudder to think
of all the opportunities that were forever lost in my life at the hand of that
I'm a lot wiser now, as a result of the hard lessons that experience taught
me. If you don't have 25 years to learn these lessons on your own, save yourself the cost and the trouble by learning from my mistakes. Dump your greed
now. How? Here are four simple steps:
Develop personal compassion. Putting the situations of others ahead of
ourselves takes our eyes off of our selfish desires. It softens our heart and
fills us with compassion for the needs of others.
Develop generosity. A heart filled with gratitude expresses itself with generosity. Generosity kills greed. As you acknowledge all that you have in light of
the needs of those around you, you'll find yourself feeling genuinely grateful in
ways you may not have experienced before. Generosity will become the natural outflowing of your grateful heart.
Put others' needs ahead of your wants. Take some of your wants and find
someone who has a real need. Take the money you would have spent on those
wants, and give it to the need instead.
Repeat. Make giving part of your personal money management program.
Can you imagine what could happen in our neighborhoods if every person
reading this were to give some of what they have―money, time and talents―
to meet the needs of others? We would start a revolution!
Just imagine living in an environment that is void of greed. It can happen, I
know, because I have experienced it. I've seen gratitude in operation in my
own community, and I cannot describe the joy and contentment this brings.
Here's what I'm asking you to do, right now. Think of five friends you can
share this issue of DPL with them. Then do it. Now. Driving greed from your
life will change your heart, and it just might do the same in theirs.
Take care and God bless.
Until next month,
Technology to improve your financial life
Cost: $75 per year
plus $10 or $15 per night
As gas prices continue to soar, many are looking
for ways to reduce their transportation costs. One
option, provided by Zipcar.com, is an online rental
service that allows its members to rent cars in their
area based on either an hourly or weekly rate. This
service may be a viable alternative for those who do
not want the cost of owning a car but may need a car
every now and again.
Though there is an initial application fee of $25, an
annual fee of $50, and a rental rate to actually use
the car, insurance and gas expenses are covered and
you can get 180 miles free (dependent on length of
After applying for membership (you must be 21 or
older), your driving record is checked and processed.
Once approved, you will receive your “zipcard,” which
is the way you unlock the car doors and fill up on gas.
With a zipcard you can start searching locally for cars
and making reservations.
as a guest: $10 for a single per night which includes
breakfast, or $15 for a couple.
Cost: $25 application;
$50 annually; rental rates vary
Evergreen Club offers those 50 years of age and
older an online community of members who offer their
guest bedrooms as a temporary bed and breakfast
home-stay for travelers.
With the membership comes access to the profiles
of hosts located all across the United States and
Canada, and even hosts in Europe. This allows you to
browse the available hosts and their accommodations,
and then gives you contact information to connect
with the host of your choice.
Unique to this service is the encouragement of
host-to-traveler interaction and the desire to create a
friendly, hospitable atmosphere.
Annual membership to EvergreenClub.com is $75,
plus a nominal “gratituty” to the host when you stay
This network-based website gives frequent
boaters, or those who simply wish to boat more often,
the chance to explore new locations through boatswapping. Since boating in new regions and on different waterways can be challenging because of cost and
distance, boat-swapping offers those who have boats a
way to move past those obstacles. This website offers
an annual membership, which allows members to
view the boat listings and a way to contact those
whose boat they are interested in. After the initial contact, provided by BoatSwap.info, the rest of the scheduling and process will take place between the parties
involved in the actual swapping.
BoatSwap.info also provides listings for cottages
and campers as well, in case you desire to swap for a
place to stay while on vacation rather than a boat.
Subscribing members are required to adhere to a list
of rules. The first year is free, but thereafter members
pay an annual fee.
Cost: Free for the first year
Lowe’s & Home Depot
Decorating and refurbishing the home can seem
like a daunting and expensive task, but it doesn’t
have to be. You can save money and put your creativity to the test by doing some of the projects yourself.
Lowe’s Home Improvement and Home Depot have
given you the resources to do just that.
Lowe’s new webpage, “Creative Ideas,” gives stepby-step instructions for indoor space projects, outdoor
space projects, and weekend projects. Each project
details the approximate amount of time it will take to
complete, estimated cost and skill level the project is
Home Depot’s “Project How-To” page incorporates
the similar concept of fixing up your home on your
own. Home Depot’s page differs, however, in that it
offers guides that are geared more towards installing,
refinishing, or removing certain fixtures or appliances.
They still contain DIY projects but offer other tips as
well, such as advice on what to look for when buying
a particular item to go in your home.
From BUDGET page 1 —
Step 5: Find the extras
Go to your current method of tracking your spending (your checkbook register, credit card statements,
Quicken reports) to see what expenses you’ve left out.
You’ll likely see items for car maintenance and repair,
gifts, vacations, Christmas and holidays. For items
that do not recur monthly, determine the annual cost,
then divide by 12 to see how much you should set
aside each month to anticipate that irregular expense.
Step 6: Figure out your totals
Add up your expenses, then subtract that amount
from your income. With luck you’ll come out in the
black, with at least a little money left over. But if your
expenses exceed your income, you’ll see a negative
sum. Don’t panic—this is just the start of an ongoing
Step 7: See where you can cut
If you came up short, go back to your projected
monthly expenses and see what you can get rid of.
Look first to your nonessential expenses. Which items
can you remove altogether for a while (eating out
seems like a fine target; perhaps hobby expenses, for a
season)? Keep going through the list, making adjustments until your total expenses are less than your
Step 8: Follow your spending plan as closely
Track your spending every day. Take notes and
research ways you’ll be able to do even better next
month. At month’s end, add up your actual spending
and compare it with what you planned. Use this information to create the next month’s Spending Plan.
Congratulations—you’ve just elevated yourself from
being clueless to financially savvy. You should feel
very good about this!
As difficult as it might be to see in black and white
that your income and expenses are not quite in sync,
just knowing where you are is going to make all the
Even if you find yourself in a particularly tight
financial position right now, take heart. As you pay off
debts and find more ways to cut expenses, you’ll begin
to sense a significant loosening of financial pressure.
Soon you’ll be ready to add new categories to your
spending plan for things like saving for a new car,
home improvements or going back to college.
The sooner you get started, the sooner you’ll be on
your way to reaching financial freedom. DPL
No more excuses!
Excuse: I’m afraid. As long as I don’t know the details of
my finances, maybe things aren’t as bad as I fear.
Response: Your finances probably aren’t as bad as you
think. And even if they are, they’re not going to get any
better if you ignore them. Tell your fears to scram,
because you’re taking over.
Excuse: I don’t know where to start. I can’t afford to buy
Response: All you need are the two Ps: paper and a pencil. Take a deep breath and start writing. Or how does
FREE sound? Check out our new DPL/Mvelopes web
based budgeting software.
How to Determine Your
Average Monthly Income*
If you get paid....
Every other week
Twice a month
Then do this ...
Multiply this income by 4.333
Multiply this income by 2.167
Multiply this income by 2
Divide this income by 3
Divide this income by 12
Excuse: I don’t want to be controlled or told what to do.
Response: Did you miss something? YOU are the creator
of your spending plan! Isn’t that a lot better than your
money controlling you?
*Include all sources: salary, wages, commission, dividend and interest
income, child-support payments, alimony, etc. If you get it on a regular
basis, can predict its arrival, and can spend it, it’s considered income.
The Case of the
ot a resistant odor in your kitchen that you just
can’t identify? Or locate the source? Hmmmm.
When did you last degrunge your coffeemaker?
Our good friend Lou Osburn, owner of NokOut.com
says coffeemakers need to be cleaned at least monthly
to remove hard water deposits, leftover coffee oils that
become rancid and other impurities. The oils in coffee
collect, spoil and form bacteria when allowed to lurk
inside that appliance.
This means I am about 10 years behind. Sure, I run
a carafe of white vinegar through my coffeemaker from
time to time (read: maybe once a year), but that’s
about it. Whoops.
This is how to do a proper cleaning, disinfecting and
deodorizing with Nok-Out: Spray the coffeemaker
inside, outside―and all over with Nok-Out. Allow to sit
for up to 10 minutes. (You could use this time to use
Nok-Out to clean and disinfect the rest of your kitchen
while Nok-Out is doing its magic on the coffeemaker.)
Fill the reservoir of the coffeemaker with clean water
plus two ounces of Nok-Out. Turn on the coffeemaker
and allow it to go through a full cycle. Do NOT use the
carafe to pour this into the reservoir. You may be reintroducing coffee oils and bacteria back into the coffeemaker. Don’t be surprised if the water that flushes
through is tan or dark colored.
Unplug the machine. Using a paper or microfiber
towel, start digging into the space where coffee
grounds are placed. Beware of what you may find.
Expect anything from grungy to shocking. Do the same
on the coffee basket, if you don’t use filters.
Spray Nok-Out into the reservoir. Do not wipe, but
rather allow to air dry. Nok-Out is non-toxic, hypoallergenic, tasteless and completely safe.
The next morning if your coffeemaker is anything
but fresh and clean, give the contents and parts another round of Nok-Out.
Visit NokOut.com for more information and to order
a supply for your home. While you’re there, check out
the latest additions to the Nok-Out family of products:
Pet Shampoo and Carpet Cleaner!
As a member of DPL, you can get a 10 percent
discount on your order of at least $8.99 not including
shipping, when you use DPL coupon code at checkout. Thanks, Lou! DPL
Make Your Own
Window and Glass Cleaner
1/2 cup non-sudsing household ammonia
1/2 cup white vinegar
2 tablespoons cornstarch
2 drops blue food coloring (optional)
Pour ingredients into a gallon-size container that
has a tight-fitting lid. Fill with warm water. Shake to
incorporate. The food coloring, while not necessary, will
alert you that the contents are not water. Label and
keep out of the reach of children.
cups rubbing alcohol
tablespoon liquid dishwashing soap
tablespoon non-sudsing household ammonia
tablespoon white vinegar
Mix in a gallon container that has a tight-fitting lid.
Fill container with warm water and shake to mix. You
can put this in a spray bottle and use as you would
any other household cleaner. Great for cleaning
chrome, countertops and bath fixtures.
Laundry Detergent Powder
1 5.5-ounce bar Fels Naptha soap, grated
1/2 cup washing soda (not baking soda)
1/2 cup powdered borax
Mix and store in airtight container or bag. For light
loads, use 2 tablespoons per load. For heavy loads, use
Big Batch: To make a large batch, grate 6 bars of
Fels Naptha bar soap and then add 3 cups washing
soda and 3 cups borax. Mix well and store in a large
TIP: Homemade detergent will not make suds in
your washer so don't be alarmed. Fels Naptha soap is
a pure soap and typically makes little or no suds in the
water. This makes it perfect for use in all washers as
well those that are designated HE. You will also notice
the need to either reduce your laundry softener or in
most cases you can even eliminate the use of softener
completely. Or, use white vinegar in the last rinse
(1 cup is plenty) to remove all traces of detergent. DPL
Yes, you can fix that leaky faucet
et’s face it, not all of us are inclined to be do-ityourselfers. Put in a new ceramic tile floor or fix a
toilet that won’t stop running?
You must be kidding!
But even I am feeling more confident that I can do
simple jobs and repairs around the house, thanks to
all the wonderful new resources out there.
Disaster struck in my kitchen on Christmas Eve
last year. I had a houseful of guests when I noticed
that my refrigerator was cooling food at room temperature. You try to find a repairman at 4PM on
Did I panic? Of course. But then I decided to follow
my own advice and went online. I entered the make
and model of my refrigerator and, lo and behold, there
were step-by-step instructions to fix the problem.
First, check the coils, it said. But when my husband and I pulled out the fridge and looked, we couldn’t find them. I went back to my computer and, sure
enough, they were exactly where the website said they
would be on our GE model. Then, using a vacuum, we
cleaned eight years of dust off the coils. Three hours
later, the refrigerator’s temperature had dropped 20
degrees and all was not lost.
These days, many consumers are saving a lot of
money by picking up screwdrivers and donning safety
glasses to tackle home repair projects. Dripping
faucets and leaking toilets top the list of problems,
and calling a plumber can empty your wallet fast. The
most cost-effective solution? Fix it yourself.
When it comes to broken appliances, most refrigerators, dishwashers, washing machines and dryers can
be repaired by novices, says Chris Hall, president of
RepairClinic.com. It’s all a matter of figuring out
what’s wrong, ordering the replacement part and then
making the repair with the help of an online technician. “You can cut the repair costs by at least 75 percent. No matter the problem, fixing it yourself is
always worth a try,” he says. “At the worst you’ll have
to call a professional, so why not try it yourself first?”
Hall, along with his staff, offers free repair help
online. The company stocks parts for nearly every
major home appliance in service in the U.S. today,
with same-day shipping and a guarantee of your
money back on returns within 30 days—no questions
Another good option: Free in-store how-to clinics at
home improvement centers, such as Lowes and Home
Depot, where you can get hands-on instruction with a
live teacher. The Internet, libraries and bookstores are
also replete with do-it-yourself instruction and handy
Of course, there will be times when you do need to
consult a professional, such as an electrician,
plumber or contractor you can trust to do the job
right and at a fair price. When possible, get a referral
from a friend or neighbor who’s had similar work
done. Or find a local pre-screened repairman or contractor at websites such as pcappliancerepair.com and
By phone, ask how the repairman charges for service, if he marks up on parts (the answer should be no)
and if repairs are under warranty. Expect a flat fee of
about $35 and up to come to the house and diagnose
the problem. Actually fixing the problem will probably
entail a higher rate—like $65 an hour, plus parts.
Major home repairs that will cost about $500 or
more may require you to hire a state-licensed contractor. Get three bids if possible, and check with your
state’s contractor licensing board to see if any complaints have been lodged against the individual or
company. Then insist on a written contract that is
clear and includes a payment schedule and completion date. You should never pay more than 10 percent
of the project price or $1,000 (whichever is less) up
front, then add progress payments as the work is
completed. Asking for payment up front is a sign of
When dealing with a contractor, your only leverage
is money. Never pay for the job in full until all the
work is done and you are fully satisfied. DPL
How long will it last?
Life expectancies of your appliances in years:
Garbage disposal: 5-12
Washing machine: 8-14
These are averages and should only be used as a guide
when making decisions. In general, repairing better-quality,
branded appliances is well worth the the cost, but repairing
cheaper or generic units is often not cost-effective.
extra two to three times. I’m amazed at how much
more water comes out of the clothes. The clothes dry
faster and I save money.
Wow! What a great idea
Using real whipping cream to ice a cake can be a
hassle when it runs and separates. The way to stop
this is to blend 1 teaspoon of dry instant vanilla pudding mix per 1 cup of cream before whipping, then
whip it to a firm consistancy and add sugar to taste.
This mixture can be piped or spread on any cake and
sets up to last for days in the fridge.
After decades of flipping pancakes at the stove while
my family enjoyed them at the table, I decided to bake
them. I pour the batter into a lightly oiled jellyroll pan
and bake at 400 F. for 20 minutes. I cut them in
squares for adults and use animal shaped cookie cutters for my granddaughters. Now all of us sit down
together to enjoy breakfast. I’ve been liberated!
Living in a very small home, we have to take advantage of every inch of space. When stacking towels for
the linen closet, I place the fold one way one time and
the opposite way the next. This allows more towels to
be stacked in a smaller space. Unless you're a fanatic
about all the folds facing the same way, this really
works! (Actually works with any items that are folded.)
I buy the cheapest store brand mac and cheese, cook
according to the regular instructions, then stir in one
slice of American cheese. It comes out much more
creamy and rich tasting.
White isn’t a good color on me, so whenever I find a
deal on a white blouse or T-shirt I dye it. One day I discovered I was out of packaged dye so I decided to get
creative. I looked through my Kool-Aid and took out the
red flavors. I put the Kool-Aid and two shirts in my
washer in hot water. Now I have two new pale pink
shirts that only cost me about 30 cents to color.
A clothes dryer uses a lot of electricity, so before I
take my clothes out of the washer I spin them an
My family favorite is to use two round white cake layers. Pipe or spread a ring of cream on the edge of the
bottom layer then spoon cherry pie filling in the center. The ring of cream helps the filling to stay in the
center of the cake. Top with the second layer. Put a
ring of cream rosettes or small spoons of cream closely together around the top edge and use more cherry
filling to fill the top center. The sides can be piped or
spread with the cream. I use about three cups of
cream for a large cake. Decorate by placing maraschino cherries on the rosettes. This can also be made a
day ahead and looks just as beautiful.
When we took our first vacation, my husband and I
wrote and sent home postcards to ourselves. We
described what we had been doing and how much fun
we were having. By mailing the postcards, the date
gets stamped on it. We have been doing this on every
vacation since. It is lots of fun to look at the pictures
and read about the good times we had.
A fun way to reuse laminated city maps (even if the
map is outdated) is to use it as a place mat. For
babies, it can be cut into a half moon shape to simulate a tray. Either way, it’s a decorative conversation
piece that can be reused by wiping off after each meal!
I don’t know where I found this “recipe,” but it’s the
best for cleaning floors: Mix together 1 gallon hot
water, 2 tablespoons Murphy’s oil soap (or liquid
Castile soap), 1/4 cup washing soda, 1 cup vinegar,
and 20 drops eucalyptus, peppermint or tea tree
essential oil. Combine all ingredients in a pail and
mop. No rinsing needed. Make sure to use washing
soda (not baking soda). Use essential oils, not fragrance oils. These essential oils that are listed are
antibacterial and the eucalyptus oil is also antifungal.
Social Lending: Part 2
Ready to Jump Into the P2P Pool?
Last month, in Part 1, we learned that what the Internet
has done to retail, to music, to movies, and so many more
industries, it is now starting to do to banks. While interest
rates remain dismal at traditional banks and credit unions,
many people are opting for peer to peer lending that cuts
Wall Street out of their transactions ....
can get your eyes on. Listen in as people share their
experiences, strategies, failures and successes.
Frequent blogs such as SocialLending.net, a network
founded by Peter Renton. This site will teach you a lot
about P2P. Learn everything you can.
Your confidence level will tell you when you’re
ready to go. Start small and conservatively. Diversify
by investing a little bit in a lot of different loans. By
spreading your money around in this way you reduce
your overall risk.
etting started with peer to peer lending can be
daunting for new investors. And no wonder. The
two major P2Ps offer hundreds of loans to choose
from representing myriad ways for you to invest your
The very first thing you need to get clear on is that
P2P represents an opportunity to invest, not save.
By definition, money in “savings” means that you
put it into a safe place where it is not at risk, it’s liquid and available to you without having to sell something or wait for some other event to occur.
Investing, on the other hand, means putting money
at risk to gain a greater reward. Money in the stock
market is at risk. You could lose not only your
“reward” or gain, but also the principal itself. Money
in your retirement account is at risk because it is outside of the “safety” of an insured account in a bank or
While there are various levels of risk lending your
money with P2P, none of these options offer any guarantees. You need to be very clear on this before you
even think about sticking your toes into this pool.
Safety net in place
Before you are ready to invest with P2P, your debtproof living safety net needs to be intact and in place.
That consists of:
Contingency Fund in which you have at least
enough money to live for six months without any paychecks. That money needs to be in a safe place and
available to you without notice.
Freedom Account in which you have set aside funds
to cover your irregular expenses for the coming year.
You are not ready to go until you have spent a good
deal of time educating yourself on P2P. Both Lending
Club and Prosper have extensive websites with loads
of articles, how-tos and forums. Read everything you
Ready, set ... go
Zero in on inquiries
As a lender you will have access to a lot of information about borrowers. Make “Inquiries” your number
one criteria. Inquiries means the number of credit
inquiries this person (the borrower you are considering) has had in the last six months. Inquiries, as you
know, are recorded in one’s credit report. As a “lender”
you will begin to see credit inquiries in a new way.
Many inquiries indicate that person has been shopping
around in many places for credit and that should be a
red flag for you, as it is for all prudent lenders.
Slow and steady
As a new social investor you will be excited to get
started. You’ll want your money to start earning big
rates of return, quickly. But if you’ve done your homework well, you’ll know that there are relatively few
loans that fit your newly gained criteria. For example,
you have $1,500 to lend and 30 loans to invest in.
You may be tempted to pick the top two, placing $750
in each. I would not recommend this. In fact, I wouldn’t invest more than $25 in each, and not all at the
same time. I’d start by investing in two or three loans,
then hold up a few weeks to place more. It could take
you some time to strategically lend the entire $1,500.
But this is the way to reduce your risk in a reasoned
way, which will give you the experience you need to
branch out in the future.
While it is possible to choose an automatic plan
with a P2P lender, I recommend that if you do not
want to be heavily involved in P2P activities, don’t get
in. A wise investor should be very involved, tracking
activities carefully, paying close attention to net
DPL + Mvelopes = FREE!
ears ago, a reader introduced me to budgeting
software called Mvelopes. Honestly, when I read
her email I was pretty sure she made a typo.
Mvelopes? How would I pronounce that? But she was
right, and I learned quickly: EM-vel-opes.
Being such a fan of the envelope method of managing money, I was intrigued by anyone who could take
my archaic method of divvying up cash into paper
envelopes marked with spending categories like
Groceries and Gas, and turn it into computer software.
Immediately, I was onboard with Mvelopes and
began recommending it to members, readers and anyone else who would listen.
I don’t recall what the software cost back then, but
I remember thinking it was quite reasonable. I loved
it because it allowed me to keep the simplicity of
envelope budgeting and go high-tech at the same
time. As downloadable software went at the time, it
was quite cool.
Over the years, Mvelopes has grown and developed
into the most effective online personal finance and
spending management system out there, bar none.
I am excited to tell you that Debt-Proof Living and
Finicity, the parent company of Mvelopes, have
recently teamed up to form a strategic partnership to
offer DPL/Mvelopes Online Envelope Budgeting to all
of our DPL family, free―not a free trial, but absolutely,
totally FREE. I could not be more excited about this.
DPL/Mvelopes pulls all your financial accounts into
one place. You create your budget, track your spending and take control of your money, for free.
With DPL/Mvelopes you instantly understand the
impact of every spending decision and you always
know exactly how much you have left to spend.
DPL/Mvelopes can be easily adapted to create and
fund your Contingency Fund and Freedom Account,
key elements of Debt-Proof Living.
Once you have your account set up so that all of
your financial information is in one place, you will
have access to your DPL/Mvelopes account from any
computer or via iPhone and Android apps, which are
Go to Mvelopes.com/DebtProofLiving to get started,
just as soon as you’re done reading this. Follow the
prompts to open your new, fully secure DPL/Mvelopes
account. The wizard will walk you through adding
your bank and credit-card accounts to your
DPL/Mvelopes, and assist you in creating your
JumpStart is a personal, one-on-one coaching session via phone, during which one of our real live
coaches will help you unlock the potential in
DPL/Mvelopes and accelerate your success with the
envelope budgeting system. I suggest that you take
full advantage of this opportunity, especially if you
have any questions at all setting up your
With your free JumpStart coaching session, you’ll
learn how to organize and prioritize your debts, which
follows our Rapid Debt-Repayment Plan. You’ll understand how to use your DPL/Mvelopes to set money
aside for your irregular expenses and your coach will
even create a debt analysis for you at no cost.
For years all of us at DPL have dreamed of creating
and developing online budgeting tools and resources
for our growing audience.
In the process of analyzing our options, we kept
coming back to the fact that Finicity and DPL are so
closely aligned in our philosophy of personal money
management. Teaming up with Finicity became the
DPL/Mvelopes is just the start of our new partnership. In the near future we’ll be telling you about
more resources and opportunities like individual
training, personal coaching as well as enhanced
DPL/Mvelopes account features you may want to consider as you get comfortable with your new budget.
It is important for you to know that I personally,
and Debt-Proof Living as an organization, fully
endorse the services and opportunities available from
Finicity. There is no doubt that together we are better.
I can’t wait to learn how these new opportunities
and tools help you in your journey to financial freedom. DPL
HARP 2.0 Mortgage Refinance Loan Program
he wait is over for homeowners who want to
refinance but owe more on their mortgages than
their homes are worth. Borrowers can now find a
wide range of lenders offering refinances through
HARP 2.0, a government program that allows
borrowers to refinance regardless of how deeply
underwater they find themselves.
In places that were hit hardest by the housing
downturn, homeowners have been waiting to refinance under HARP 2.0 for months, as it is their only
chance to refinance at a lower rate.
Following the real estate crash of 2008, the government rolled out a program called The Affordable
Refinance Program (HARP). The purpose was to help
people whose homes were underwater, in that they
owed more than the property was worth. Let’s just say
the HARP was not all that successful. It was riddled
with problems and very few people were able to actually refinance.
A new, and hopefully improved version, HARP 2.0
was rolled out on March 19, 2012. While complicated,
HARP 2.0 appears to offer realistic hope for many
whose homes continue to be underwater in this challenging economy. It is definitely worth your consideration if you find yourself in that position.
Basically, HARP 2.0 allows homeowners to refinance their mortgages to current interest rates under
You are eligible for HARP 2.0 if:
1. Your mortgage is owned or guaranteed by
Freddie Mac or Fannie Mae and you got it before June
1, 2009. Go HERE to look up your loan.
2. You haven’t already refinanced under HARP in
the past few years.
3. Your current loan-to-value is greater than 80
4. You are current on your mortgage with no late
payment in the past six months and no more than
one late payment of 30 days or less in the past 12
Of course there are other things you need to know
as you head into the murky waters of refinancing
Any HARP lender
If you meet these qualifications, you can refinance
with any HARP lender, not only your current lender,
although approaching your current lender or service
provider is where you should start.
You need to know that many HARP lenders are
applying their own restrictions for HARP loans beyond
what Freddie Mac and Fannie Mae require. Typically,
lenders have their own loan-to-value and credit score
requirements. Some lenders will not go beyond the
125 percent loan-to-value from the original HARP program. But others will, with no cap.
You may still need an appraisal, although more
automated underwriting is being allowed in the HARP
2.0 program. The number of appraisals required is
expected to drop by 80 percent.
Your debt-to-income ratio (DTI) will be scrutinized
and every lender has its own criteria. Even though
your monthly payment may drop considerably once
you refinance to a lower interest rate, lenders want to
make sure you will be able to make your payments on
time. The most effective way to do this is to evaluate
what you make versus what you spend.
Don’t give up
If you do get turned down by one or two lenders,
make sure you keep shopping around. You just might
find one who will work with you under these new
HARP 2.0 guidelines.
We are hearing that fees on refinanced mortgages
under HARP 2.0 are still fairly high, but again, they
vary by lender. Just beware.
Is it worth it?
Refinancing under any government program is
going to be complicated and filled with red tape. Just
plan on it. And it will be worth it if, for example, you
can refinance your current 7 percent underwater situation to 4 percent fixed. Not only will you reduce your
monthly payment, you’ll be grateful for a low fixed
rate of interest with a payment you can afford should
interest rates rise in the future. They will.
Is it moral?
Refinancing under this HARP 2.0 is not the same
as a “strategic default” where homeowners are simply
walking away and defaulting on their mortgages. In
that case, one faces a moral dilemma because it is
wrong to make a vow to pay and then to go back on
Refinancing, however, is simply renegotiating the
‘carry cost’ on the loan, which is the interest rate. You
are not reneging on your faithful promise to repay the
debt. Refinancing has only to do with the interest rate
on that debt.
Why should a lender cooperate?
Bottom line for a mortgage lender is assurance that
it will get those monthly payments and that the
homeowner will not default on the loan. As long as
you are paying high interest on a mortgage that is
upside down, the lender is quaking each month wondering if you’re going to be able to make that payment.
It is in the lender’s best interest to get you into a
position where you are less of a risk and more likely
to not default.
Part of the HARP 2.0 program is that it releases
lenders from underlying liability stemming from the
original mortgage. That is a key incentive for lenders
to participate and cooperate in refinancing these
What about my credit score?
Here again, lenders have their own criteria and are
allowed under HARP 2.0 to determine what is an
“acceptable credit risk.” However, the way I understand the conditions of HARP 2.0, a low credit score
is not enough to automatically disqualify a borrower.
What about HEL?
If you have a second or home equity loan (HEL)
you're more likely to encounter delays. That's because
the second mortgage lender has to sign off on the refinance, agreeing to subordinate the loan to the lender
who refinances the first mortgage. While this will
delay the process a bit, it should not kill the deal.
The good news is, lenders will be more willing to
sign off on HARP 2.0 refinances than they were with
the previous version of HARP.
Never has there been a time when it was more
important for you to get out of debt to reduce your
expenses, than it is now.
With inflation on the rise and the fact that eventually interest rates are going up, you cannot afford to be
in debt and also prepare for the future. Refinancing a
troublesome mortgage is a great place to start. DPL
Mary’s NEW! Book Available in the DPL Bookstore!
✹ 20% Member Discount!
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“Starting where you are right now, you can take control of your finances.
You have the power to control your financial destiny.
“The 7 Rules will empower you to fix your finances one step at a time,
moving you out of debt and ultimately to financial freedom, regardless of the
country’s progress.” - Mary
Simple Rules. Big Payoff.
Go to DebtProofLiving.com and click on “Bookstore”
Dear Mary ...
I’m looking for a new job. My current employer offers
great benefits and even pays for my health insurance.
Since I know this probably won’t be the case at a new
company, I’m worried any new out-of-pocket payments
I’ll have may offset an increase in salary.
How do I include these sorts of things when coming
up with salary requirements?
Most employees would be shocked to see what their
benefit packages are worth in dollars and cents. If you
have a good employee compensation package that
includes health, vision and dental insurance, paid
vacation and sick leave, consider that to be worth at
least 30 percent of your gross income.
Before you leave your current position, do your
homework. You know what your paid vacation is
worth, your sick leave, too. Get three quotes for health
insurance that are similar to the coverage you have
now. Come up with a dollar figure on an annual basis
that reflects your current benefit package.
Seeing in black and white what your current benefits are worth will be a valuable exercise whether you
make the change or not.
My son graduated from college about a year ago. He
has a job, but with student loans and some credit-card
debt, he is struggling a bit financially. I know with
smarter choices he could pull himself out of this.
He has asked his father and me for help. We want to
be good parents and provide for him. At the same time,
we also think that since he’s an adult, he needs to start
taking care of himself. Is there any compromise?
I have two grown sons, so I can relate. Since your
son has asked for help, this might be the perfect time to
teach as well. Don’t just give him a handout. Help him
set up a budget.
It’s possible he, like so many people, has never
learned how to manage money. Because he has come
to you asking for help it’s possible he’s open to receiv-
ing your guidance as well. He needs to be accountable,
but not in a child/parent way.
Think of this as more of a client/counselor relationship. In the same way he would have to create and
submit a business plan to get a business loan, have
him create a personal finance plan for how he intends
to use the money you lend to him, how he intends to
manage his income each month and how he plans to
pay you back.
It’s time for your son to get real about his money,
and this could be the perfect opportunity you need to
teach him valuable lessons.
Not sure how or where to start? Pick up a copy of
my book, 7 Money Rules for Life: How to Take Control
of Your Financial Future. I’ll teach him everything he
needs to know to manage his income now and for the
rest of his life.
One of my colleagues has been raving about the
amazing leg waxes at the beauty salon where she goes.
She says the best part is that they’re cheap because
the technician is the owner of the salon, so she doesn’t
have to tip her.
I’ve never heard of that rule before. Is it true?
When it comes to tipping or monetary gratuities there
really aren’t set rules, just guidelines based on trends,
etiquette and regions.
Not tipping the salon owner was customary at one
time but that is no longer the case in most areas. In
fact, of the 87 people I asked, 79 said it would make
no difference—they would leave the same tip depending on the quality of service received whether the
owner did the work or not.
It seems to be a rumor that owners don't receive tips
when they perform a service. It’s always a good idea
when calling to schedule an appointment at a new
place to ask up-front about the tipping policy.
Need to save
This has been bugging me: At my bank’s ATM, there
is a big trash can where everyone throws away their
transaction slips. It seems like a bad idea to toss them
away since they show the balance and transaction info.
But being cautious means I end up with an overstuffed,
Do I need to save them, and what’s the best way to
get rid of them?
Dylan, North Carolina
Ignore those waste bins and hold on to your ATM
receipts: You’ll need them when you receive your bank
statement to verify that all your deposits and withdrawals were posted correctly to your account.
Keep your receipts in chronological order in the pocket of your checkbook or wallet, or any place that is convenient. Just make sure you always put that receipt in
the same place so that it becomes a useful habit.
Banks do make mistakes, and those little slips may be
your only proof.
That said, once everything checks out, get rid of
them. As with any financial document, the safest way
to get rid of ATM receipts is with a paper shredder. But
if you don’t have one, it is okay to simply tear them up
before tossing. Since they don’t list your account number or other highly sensitive information, the slips
aren’t too big of a concern.
Recently I received an inheritance from a distant relative. I’d like to use it to pay off my car early. I have
about eight payments to go, and the thought of not
having that monthly bill is really appealing.
But then my dad said I wouldn’t be saving anything
and that there are better ways to use the money. Is he
It all depends on how your car loan is structured. If
it is a simple interest loan (typical) each month you pay
interest on the outstanding balance. If you pay it off
early you will avoid eight months of interest.
Even if you have a loan where you agreed to pay a
set amount of interest (not likely), you won’t save any
money but there’s still a big emotional payoff for early
payment. There’s just nothing like a $0 balance!
Here’s an idea: Use the windfall to pay off the balance. Then make a commitment to keep making those
eight car payments, but make them to yourself. In eight
months you will have restored the windfall, saved
some interest and have a paid-for car, too.
I am beside myself with anger. Once a year everybody in my department gets a 2-percent bonus.
One of my coworkers let slip that she plans on using
hers to buy a new sofa. I found out how much the sofa
cost and flipped out!
I figured out she makes $6,000 more than I do but
we do the same exact job! Not only that, but I’ve been
at the company two years longer than she has.
Shouldn’t our salaries at least be equal?
I have to say that you are way off base on this one.
First, by its very nature a “bonus” is an unexpected
reward, not something you are entitled to.
While I think it’s quite amazing that you took the
time to calculate your coworker’s sofa purchase, I wonder if it occurred to you that she might be using her
bonus as a down payment? (Not that I would recommend that, but she’s not the one who wrote.) For you to
waste any time or energy trying to figure out what she
earns and then comparing her salary and job description to yours is counterproductive.
I suggest you get your nose out of your coworkers’
business and direct that energy instead to being the
best employee you can be, doing the best job possible.
Change your attitude from greed to gratitude and
before you know it you’ll be the one approving salaries
and handing out bonuses.
The other night I had pizza delivered for dinner.
Because I didn’t have cash, I used my credit card. The
guy on the phone asked for the three-digit security
code. I felt a little funny about giving it out, but did.
Why did he need it, and was it OK to give it to him?
Dale, New Jersey
Your credit card security code is a code assigned to
and displayed on your credit card. Unlike everything
else on your card, that code is not embedded in the
magnetic strip. Retailers, particularly online merchants,
require you to provide this code as an anti-fraud measure that protects you against unauthorized charges.
Only a person in possession of the card will have the
code as it is not shown on a credit card charge slip nor
on your statements.
Theoretically, your pizza guy has all the information
he needs to go shopping with your card now that he
has the number, expiration date and security code.
And so do all the waiters and retailers to whom you
hand your credit card to pay for a meal or to buy
things at the store. But that is unlikely.
Because simply owning a credit card opens the door
to fraud and identity theft, I strongly suggest you take
advantage of your credit card company’s website. Sign
up to monitor your account online, check it every day
when you check your email and then relax. If you see
a charge you did not make, report it immediately,
requesting that your card be cancelled and reissued
under a new number.
Or do what I do: Sign up for Lifelock protection. I
don’t have time to monitor daily, so I hire them to do it
for me. I get 20-percent off and so can you when you
use our special Coupon Code: DPL. DPL
Got a Question, Story or Tip?
Send your feedback by mail to Mary Hunt, c/o Debt-Proof Living, P.O. Box 2135, Paramount, CA 90723-8135,
or via email on our website, www.DebtProofLiving.com. We cannot guarantee a personal response. Questions, tips and stories chosen for publication will appear in
an upcoming issue of this newsletter, or Mary’s daily email “Everyday Cheapskate,” www.EverydayCheapskate.com. Mary looks forward to hearing from you!
P.O. Box 2135
Paramount, CA 90723
“Someone else is happy with less than what you have.”~ Unknown
Keep up with what’s going down
on the news
Financially illiterate. Recent stud-
ies show that a majority of young
people in the US have poor financial literacy, a trend that has been
consistent over the past decade
and shows few signs of improving.
This at a time when young adults
face a difficult job market and
more personal debt, and yet must
take greater responsibility for their
Today's twentysomethings hold
an average debt of about $45,000,
which includes everything from
cars to credit cards to student
loans to mortgages, according to a
PNC financial independence survey
released last month.
From USA Today
Mary says: There is a solution:
Compulsory education in practical
personal money management at the
college level. I find it more reasonable to prepare young people than
Pricey olive oil. If you’ve ever
wanted to dress a salad with $100
bills, this may be your dream come
true: A bottle of Lambda olive oil
that comes with a price tag of
$15,000 per bottle ($147 per teaspoon)―more than a Honda Civic
or a first-class ticket to Greece.
Mary says: I’d prefer the Honda,
in a lovely shade of olive green.
Prom is the new wedding. A sur-
vey just released by the folks at
Visa who conducted 1,000 phone
interviews, reveals that families
with teens are expected to spend
an average of $1,078 on prom this
spring. Spending has been driven
to never-before-seen levels as teens
are influenced by everything from
celebrities and reality TV to the
prevalence of social media, experts
say. Appearance is everything, and
for prom, appearance really matters.
From Gannett Company
Mary says: It’s pretty hard to
shock me these days, but this story
did just that. I hope the people over
there at Visa are very proud of
themselves because I do hold them
and their consumer credit industry
responsible for such lunacy. I’d love
to see how much of this $1,078 per
prom is now someone’s revolving
Not only are we bringing up a
generation of financially illiterate
young people, we’re funding their
need to impress others, even if they
can’t afford to pay for it.
Inflation: Not as low as you think.
Forget the modest 3.1 percent rise
in the Consumer Price Index, the
government's widely used measure
Everyday prices are up some
8 percent over the past year,
according to the American Institute
for Economic Research.
From CBS News
Mary says: The AIER in their calculations does not look at big onetime purchases as the CPI does, but
instead focuses on food, gasoline,
child care, prescription drugs,
phone and television service and
other household products. I think
this organization is far closer to the
real number than the people who
figure the CPI, which excludes food
and gasoline from its calculations.
Cash for your castoffs. You
shouldn't throw your old electronic
items out with the trash for two
reasons. First, because of all the
toxins they can contain, and second, because you may be able to
cash in those old gadgets at any
number of electronics stores or
Stores and online retailers such
as Amazon.com, Best Buy, Radio
Shack, and Target, will take your
old electronics and either offer a
trade in, store gift card or cash.
From Consumer Reports
Mary says: Where’s the “Like”