My 1st Million At 33 – yes, you can do it too

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  • Archive for March, 2010

    Freddie Mac Open Access Refinance

    Posted by Frugal on 16th March 2010

    Those whose mortgage are owned by Fannie Mae, there are not a lot of problems with Obama’s home affordability program, which allows refinancing of upto 125% LTV. However, those owned by Freddie Mac are much harder to refinance. Freddie Mac had an open access program started since last October, but the program will end on June 30. If you have not refinanced, I am working with a mortgage partner who can give you fairly competitive rates. You can email me your contact information, and I can help you refinance through Freddie Mac Open Access program. Condominiums are also okay (but with extra 0.75% fee charged by Freddie Mac). Most mortgage brokers won’t even touch Freddie Mac loans on condos. And please check with the above open access program guideline first, and make sure you meet the eligibility (no second loan, primary residence, etc.) And California loans only for now.

    For purchase & refinancing through regular loan programs with 80% LTV, you can use the quotes from I can promise to match or beat their quotes.

    Frugal at

    Posted in Investing | 2 Comments »

    A Memorial on Rachel Corrie, a true American Hero

    Posted by Frugal on 16th March 2010

    Today is a very sad day, a day on which Rachel Corrie was killed seven years ago in 2003 by Israeli bulldozer. She died in protesting against bulldozing a Palestinian doctor’s home. In the name of “settlement” expansion, Israel continues to bulldoze Palestinian properties. Everyday children of Palestine live in fear under Israeli control. Obama’s words of speaking against settlement are good for nothing, same for his Nobel Peace Award. The peace for humanity is nowhere to be found, with Palestinian tragedies continue on a daily basis. US Congress has even voted overwhelmingly 344 to 36, condemning UN Goldstone report on Israeli war crimes in Gaza, when you can see the youtube video for yourself on the usage of white phosphorus chemical weapon against Palestinian civilians. I cannot understand how some people face their God daily. Maybe they are their own god, and they make up their own rules & laws as they see fit.

    Regardless of how others live their lives, I cannot live my life without standing up and voicing my concern for the crimes committed against humanity as a whole. All people whether white or black, female or male, Palestinian or Israeli, believers or non-believers, are all my brothers and sisters in-God. We are all related to each other. No one lives on an island alone. If the human suffering saddens my heart, then it must sadden a thousand times more for Christ’s heart (or any religious figure’s that you believe in). If you’re a Christian, won’t you follow the footstep of Christ, and tread on the narrow path to eternal life?

    When I was much younger around 10 years old, I often wondered what is the meaning of life? If everyone is going to die anyway, what is the point of acquiring the impermanent material wealth and live a life to just to die at the end? Then suddenly it occurred to me that “the meaning of life is from death”. It is death that gives the finiteness of life, a lifetime that cannot be eternal. In this finite lifetime, everyone as an individual, will need to make his or her own choice, to spend their time and money on the things that are worthy of cause. Some people revel in material enjoyment. Some people pursue the knowledge of Truth. And there are some others who mistaken Might as being Right, taking things from the weak and poor. It is because of this finite lifetime or death that bestows the true significance of our daily action, or the life we called it. Some choice must be made, and some sacrifices are needed. The great people among us choose to sacrifice their time and money for others, even knowing that their time & resource is finite. The average people lives on without much thinking. Rachel Corrie no doubt exemplifies one of the greatest people among us. She rises above so high that her spirit lives on, even when her physical body has perished.

    Here is the video of Rachel Corrie’s speech “I’m here because I care” when she was only 5th grade.

    I have watched her speech several times. I can’t help but cry. She is such a wonderful caring person. She dedicated her whole life for others, and laid down her life as a martyr. In the Bible John 15:13, “Greater love has no one than this, that he lay down his life for his friends.” (New International Version). Such is the magnitude of Rachel’s love for others, and none of other kinds comes even close in comparison. Here is a couple of youtubes that I found and enjoyed. Maybe you won’t remember her a year later, but I know I will remember her for all of my life, and I will look up to her as my inspiration forever.

    Posted in Investing | 2 Comments »

    US dollar crisis in this decade

    Posted by Frugal on 9th March 2010

    As I have said well before the financial crisis hits back in 2006 on my blog, this game between the liars (housing speculators) and the cheaters (the bankers who totally expected to pass the AAA-rated toxic mortgage loans to Fannie Mae & Freddie Mac & other mortgage investors, but somehow got caught with a huge volume on their own book) will eventually bring down the US financial power through a hefty US dollar devaluation in the future. It is simply unavoidable mathematically speaking, and Fed governor Hoenig has finally echoed my view, declaring a fiscal urgency for policy changes.

    I believe that $US dollar will probably be strong going towards 2011/2012 initially due to all the deleveraging, but then will start a gradually accelerated pace of slow grinding down towards 2015/2016, with an initial reckoning shock at around 2015/2016, or a faster pace of drop all the way towards 2020. I am projecting these dates based upon the PI cycle, which basically hit the US financial/housing sector peak date almost exactly back in 2/27/2007. US has completed the full 224 (=8.6 x 26) years of political cycle back in 2000 since declaring independence on 1776 according to Armstrong, and I believe that for the next 10 x 8.6 years = 86 years, the international influence of USA will be declining ( 10/26 is the shortest & closest to 1 – golden ratio of 0.618). This completes the total of 6 of 6 waves of 8.6 years grand cycle (6 x 6 x 8.6 = (26+10) x 8.6) as 309.6 years in total.

    Martin Armstrong, the greatest economist in this decade, in my personal opinion, is still being jailed in prison for 10 years and counting. Just last week, he was still being punished within prison for possibly speaking out against big financial institutions, and/or helping out other inmates on legal issues. During the legal proceeding back in year 2000, he was denied his constitutional rights for a jury trial. No trials at all, but a judge who sent him into jail for 7 years for “contempt of the court”. That was not even a charge based on any kinds of finding or discovery. His rights were deprived because the judge claimed that as corporate officers, he was tried as corporate, and because corporates are not persons, and therefore corporates do not have any personal rights. In this country, the laws are whatever the judges say and interpret. Supreme court has recently passed that corporates can spend as much money for political lobbying and contribution because corporates should be treated as persons with rights to free speech for this purpose. Tell me if you can reason with this logic that corporates are not people as trials, and corporates are people for political donation. When the rights to justice and rights to free speech are determined and sized by how much money one can spend on lawyers, on radio/TV advertisement, we as individuals no longer have any rights, but are enslaved inside the economic and political machines.

    In our lifetime and beyond, we will witness more and more political upheavals at all levels of government, including big changes in international political arena. US would be reaping its “karmic” consequences for destroying the savings of global savers in this process. We (or those who reside in USA) will be the very people who will rise up against the financial tyranny of the government through uncontrollable waves of US dollar devaluation and erosion of living standards, bringing the political upheavals, and undermining US international influences due to domestic political turmoils and discovery of shoddy financial transactions between big government and big financial oligopoly. The student protests from last week are only a start of a series of mass rising against established authorities that are going to continue for several years.

    As they said, horns have been blown, and the Revolution has already started. I invite you to join the Campaign for Liberty, and Ron Paul’s fight against big government and big corporates.

    Posted in Investing | 6 Comments »

    Why consumers are paying down credit card before mortgage

    Posted by Frugal on 8th March 2010

    Here is the article from, reporting consumer behavior is changing, putting credit card debt before mortgage. Why would anybody put the priority of unsecured debt over debt that is secured by the home & the roof over someone’s head? It is puzzling to all the bankers and people who only crunch out a meaningless FICO number.

    The reason is extremely simple. Paying down minimum payment on credit cards will allow the continual usage of the credit cards to pay for food & bills. Paying down an up-side-down mortgage is throwing away good money. Besides, these stupid banks are still hoping for the impossible, for the housing prices to come back right away, and not willing to write off the loans. Or I should say the bankers just want to keep their jobs so that the bank will not be declared as insolvent, and overtaken by FDIC. In the meantime, the bankers continue to siphon off FDIC & US taxpayers’ money by paying big bonuses, and the unscrupulous housing speculators continue to enjoy totally free rent on the back of the entire financial system. Of course, it takes all the number crunching for FICO to realize this, and a gigantic financial losses for bankers to come to their common sense: no one in their own self-interest is going to pay down an under-water 100% or 125% LTV mortgage that is growing to 120% to 150% LTV mortgage.

    By the way, if taxpayers don’t pay bonuses to AIG, and funnel all the bailout money to these bankers/fraudsters, we will lose all the top “talents” who are too greedy to even understand the above truth.

    Posted in Investing | 3 Comments »

    Housing bubbles everywhere

    Posted by Frugal on 5th March 2010

    I thought that what happened in US since 2007 (and in Japan back in 1990) would have taught people some lessons. But human greed knows no bound. Either they don’t read news, or they’re too greedy. There are still booming undying bubbles in China, Taiwan, Canada, Australia.

    It is apparent that most participants recognize the value of housing investment in protecting assets against inflation. It has been the preferred financial instrument, especially in Asian culture, to buy real estate because
    1. It won’t go to zero, because it’s “real” estate, and you will always have it.
    2. It pays out dividends in the form of rent.
    3. It always “goes up” in the long term.

    My colleague asked me whether I know how much real estate has gone up since 50 to 60 years ago. He told me it’s tens of thousands of percents. Well, but one must recognize the fact that since 1930, $US has depreciated 94% in buying power, according to government official statistics (and probably worse if using unofficial figures). The primary reason that real estate goes up in the long term is because of general inflation. Since a couple of decades ago, another factor that helps real estate price is that the financing costs/interest rates have been going down. However, over the long term, the average real estate prices cannot exceed inflation rate by too much and/or for too long. Why? If real estate simply returns 1% more every year than the general inflation, after 100 years, real estate price will be 270% higher than the general wages. After 200 years, real estate price will be 732% higher than the general wages. Well, the economic law of supply and demand will always balance things out. Eventually, either people cannot afford homes anymore, and younger generation stops forming families, resulting in reduction or stagnation in population, and therefore reducing demands for homes, or the home prices will simply FALL behind the general inflation rate. And I can bet you that it will happen before real estate prices are 732% higher than the general inflation rate. In fact, both Japan and Taiwan are already showing such signs of either declining population or stagnant growth. If you have so much money that you don’t need to worry about future, housing, employment, etc, and you have all the leisure time in the world, won’t you tend to have children? On the other hand, the opposite extreme scenario would probably be true also. So if the population is declining, who is going to fill up the existing housing space, not to mention that builders will always build more. Imagining a hypothetical scenario, where for every grand kid, he or she is inheriting at least 2 homes from both sides of the grandparents, and/or parents, and/or any unmarried relatives who have passed away, now won’t the housing and/or rent price go down because there are extra supplies versus demands? Of course, before long, economic law of supply and demand will kick in, and population would have increased.

    What I’m trying to point out is that it is simply IMPOSSIBLE for housing prices to stay higher than inflation rates for too long. Those that bet on housing prices will increase 10% above inflation rate every year are simply delusional.

    Posted in Real Estate | 9 Comments »

    A buying strategy for the current housing market

    Posted by Frugal on 1st March 2010

    Very infrequently I come across some articles that are so well written that I feel obliged to recommend them to people. And I found it at Irvine Housing Blog. IrvineRenter, the owner of the blog has written a couple of excellent articles that should be must-read for every home buyer.

    On “Valuation of Lots and Raw Land”, IrvineRenter explained in details how the valuation of an investment in raw land would work out. To sum it up, land investment works like a call option on the housing market.

    On “Loan Assumption is the Appreciation of the Twenty-Teens“, IrvineRenter gave his best advice (and I concur too) that the best bet in building your home equity is probably by buying with an assumable AND fixed-rate loan. Unfortunately, as far as I know, the only assumable loans these days are FHA loans, which have higher fees in general. Why is that? A good deal to the borrowers is always a bad deal to the lenders. The scarcity of such loans automatically tells you that assumable loans are not good for lenders.

    And at last, on “Fundamental Valuation of Houses – Part 1“, IrvineRenter explained in details about the math of home ownership cost. His article almost acts like a companion manual to my online java housing cost calculator. All of the factors that he has mentioned, I have included them in my online housing calculator, plus commute cost difference. But just one caveat, garbage in, garbage out. My calculator is only as good as the validity of your input assumption. If your assumption on the housing parameters such as rent/housing inflation or tax rate, are inaccurate, then the results will be inaccurate as well.

    So what’s the buying strategy for the housing market? In case you missed it, it’s using assumable fixed rate loan. On a longer term, I believe that the mortgage rates will be going up. Contrary to all the unscrupulous realtors, the best time to buy real estate is when the mortgage rates are at the highest, not when they’re at the lowest. Lower mortgage rates always cause the housing valuation to expand, while higher mortgage rates will rein in the price. Assuming a forward picture of higher than normal inflation, and mortgage rates trending higher, the inflation force may arrest and balance out the decline caused by higher mortgage rates. Nominal housing prices may stagnate for a decade or even two decades, but inflation-adjusted price will continue to decline. Such picture does not bode well for many participants. The renters will see their rents going up due to general inflation. The new home buyers may still see price declining if the nominal prices have not reached bottom. Worse yet, if the equivalent ownership cost of their home is higher than prevailing rent, then they’re effectively speaking draining any potential savings that they could have built without buying a home. In such picture, the only potential remedy would be to have an assumable fixed-rate loan, so that one could recover the price benefits between future higher mortgage rates and the current lower mortgage rates.

    And if you cannot find such loan, make sure you put the least amount of down payment, and borrow as much as you can for 30 years fixed. Forget about adjustable ARM. The only way to short the bond markets and US dollar simultaneously and safely without margin calls is to borrow against your real estate holding.

    Posted in Mortgage, Real Estate | 1 Comment »