Dear Mary: My house is worth half of what I owe on the mortgage. Is it still considered a secured debt? I would love to sell it. I've even tried to give it back to the bank, but they won't take it. Many people are in my situation. I'm trying to play by the rules, but I feel they keep changing.
-- Laurie, Michigan
Dear Laurie: The housing crisis in this country is a tragedy, and one that too many people didn't see coming when they mortgaged their homes so heavily. However, I do not see where the rules are changing, as you suggest. In fact, I see the opposite. Many people now want lenders to change the rules based on the economy.
Technically, your mortgage is a secured debt only up to the amount you could sell it for at this time. That makes the whole thing pretty much unsecured.
I'd love to know why you are now wanting out of the deal. Is it because you just can't bear the thought of your home being worth so much less than when you bought it?
If you can get past thinking about its market value and if your mortgage payments are still affordable, I suggest you stop thinking about its value. The market is what it is. You borrowed the money to buy the house. There wasn't a clause that stated you would repay the debt only if the property continued to appreciate. The lender financed your purchase. Nothing has changed. Keep making the payments as you promised and enjoy living there.
If you have gone through a life-shattering event like a long
Dear Mary: I have been a member of Debt-Proof Living for years. Many years ago, you wrote about Direct Purchase Stocks (DRIPS). I would love to get resources or updated information on companies that offer DRIPS. You wouldn't believe how many people I've shared your info with over the years.
-- Mary, California
Dear Mary: As you suggest, many publicly traded companies allow people like you to invest directly with the company without going through a stockbroker or paying a sales commission on the transaction. "DRIP" is an acronym for "dividend reinvestment plan," but "DRIP" also describes the way the plan works. With DRIPs, the dividends an investor receives from a company automatically go toward the purchase of more stock, making the investment in the company grow little by little.
These programs do not require an investor to purchase whole shares, which makes these plans somewhat unique. A person could, for example, buy $25 worth of stock in the company on a regular schedule, like once a month. That might purchase only a portion of a share, but that's OK. The corporation keeps detailed records of share ownership and dividends paid. Companies that offer their stock through a DRIP plan really do want you to buy directly from them, starting with just one share.
To learn more about how to get started investing in DRIPS on your own, including specific information on companies that offer these programs, I recommend learning all you can at DirectInvesting.com.
Dear Mary: Several years ago, I began following your advice about taking more control of my finances. You wrote about using cash instead of credit and debit cards. I began doing that.
On paydays, I'd stop at the bank and withdraw enough money to last until the next payday. I then challenged myself to keep some of that money, which would then go into a piggy bank at home.
I just want to thank you. Now that the banks are adding fees and debit-card charges, I am way ahead of their game. I still use only cash. I feel like I have won, and all from a lesson learned from you several years ago. Keep up the good work. We're still listening!
-- Carol, California
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