Foreclosures

A good article on the current state of foreclosures.  We still have a ways to go; however, the window won’t be open forever.

http://news.yahoo.com/s/ap/20100916/ap_on_bi_ge/us_foreclosure_rates

“Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis.” 
“August makes the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis.”
“That’s one reason fewer than one-third of homes repossessed by lenders are on the market, said Rick Sharga, a senior vice president at RealtyTrac.”

Calculator Problem – 2010-09-13

You have a credit card with an interest rate of 14.99% and a balance of $6700. If you paid $350 a month, how long would it take you to pay off your credit card?

(The answer will be posted with the new calculator problem in 2 weeks.  Or if you can’t wait that long, you can go to http://www.facebook.com/pages/Gary-Johnston-Seminars/111368472221424 for the answer.)

To find the answer to the 2010-08-30 calculator problem, we first need to find the future value of our $30,000 which is FV=1,584,825.92 (N=240, I=20, PV= -30,000, PMT=-0).  If we borrow another $30,000 and invest at 20% but pay 10%, we would net $250 a month ($30,000 * 10% = $3000 / 12 months).  If we add that $250 every month to the calculation, we would get FV=2,362,238.88 (N=240, I=20, PV= -30,000, PMT= -250).  Now that we future value, we can calculate the yield on our original investment.  I=22.30 (N=240, PV= -30,000, PMT=0, FV=2,362,238.88).  22.30% on our original investment.

1099 requirements

As a part of the health care reform bill, there will be a new requirement starting in 2012 for self-employed workers, businesses, and charities to issue a 1099 to every vendor that they purchase more than $600 from during the year.  This is going to be a big change and you will want to start thinking about how you will implement this.