Once upon a midnight dreary as I pondered weak and weary
Over many a quaint and curious volume of accounting lore,
Seeking gimmicks (without scruple) to squeeze through
Some new tax loophole,
Suddenly I heard a knock upon my door,
Only this, and nothing more.

Then I felt a queasy tingling and I heard the cash a-jingling
As a fearsome banker entered whom I’d often seen before.
His face was money-green and in his eyes there could be seen
Dollar-signs that seemed to glitter as he reckoned up the score.
“Cash flow,” the banker said, and nothing more.

I had always thought it fine to show a jet black bottom line.
But the banker sounded a resounding, “No.
Your receivables are high, mounting upward toward the sky;
Write-offs loom.  What matters is cash flow.”
He repeated, “Watch cash flow.”

Then I tried to tell the story of our lovely inventory
Which, though large, is full of most delightful stuff.
But the banker saw its growth, and with a might oath
He waved his arms and shouted, “Stop!  Enough!
Pay the interest, and don’t give me any guff!”

Next I looked for noncash items which could add ad infinitum
To replace the ever-outward flow of cash,
But to keep my statement black I’d held depreciation back,
And my banker said that I’d done something rash.
He quivered, and his teeth began to gnash.

When I asked him for a loan, he responded, with a groan,
That the interest rate would be just prime plus eight,
And to guarantee my purity he’d insist on some security—
All my assets plus the scalp upon my pate.
Only this, a standard rate.

Though my bottom line is black, I am flat upon my back,
My cash flows out and customers pay slow.
The growth of my receivables is almost unbelievable:
The result is certain—unremitting woe!
And I hear the banker utter an ominous low mutter,
“Watch cash flow.”
Herbert S. Bailey, Jr.

Source:  Reprinted from the January 13, 1975, issue of Publishers Weekly, Published by R. R. Bowker, a Xerox company.  Copyright 1975 by the Xerox Corporation.

Earlier this month, a fellow personal finance blogger, The Simple Dollar, wrote an excellent piece about how he and his family was defining themselves by stuff up until two years ago.  They were buying five DVDs every week along with the latest gadgets, golf clubs, and other stuff on whims.

He nearly had a financial meltdown, he says… until he got smart about debt, money, and what’s really important.  He started selling off excess junk that he had accumulated, and seriously watched his spending.

Read how The Simple Dollar made life-changing habits to make his debt shrink instead of grow.  Now he and his wife celebrate multiple streams of income and feel financial satisfaction–something completely foreign to them before.

Check out The Simple Dollar for this inspirational story and suggestions for your own transition into control over money.

I just read an article over at ‘Smart Money‘ about how couples often make similar mistakes in regards to their finances. It brings up many good points and issues.

“Most of us don’t know how to talk about money,” says Mary Claire Allvine, a certified financial planner (CFP) and co-author of “The Family CFO: The Couple’s Business Plan for Love and Money.”

“People tend to be emotional and reactive about money, not strategic,” she says.

When emotions run high, people tend to make fiscal mistakes. Allvine’s solution: Approach family finances as if you were running a business. “If you put a business metaphor into the picture, you’d be surprised how much more methodical people are.”

In this article she talks about 6 common pitfalls that could arise if issues are not properly resolved.

1. Merging finances
2. Controlling debt
3. Spending habits
4. Investing Wisely
5. Money Secrets
6. Emergency Planning

Give the article a read, I think that you will find it full of good ideas and perspective for you.

Many veterans who have used their VA Home Loan benefit to purchase their homes have also refinanced with an Interest Rate Reduction Refinance Loan (IRRRL). An IRRRL is a refinancing program that is offered by the VA for veterans who want to refinance their current loans to get a better interest rate on their mortgage.

Some interesting facts that you should know about the VA IRRRL are:

• An IRRRL is used to refinance an existing VA loan with a new VA loan that usually has a lower interest rate.
• An IRRRL can be a fixed rate loan, an adjustable rate loan, or a hybrid adjustable rate loan.
• An IRRRL must be at a lower interest rate than your previous mortgage loan unless you are refinancing from an adjustable rate mortgage loan. This is because the interest rate with a fixed rate loan may be the same or slightly higher than your current interest rate with your adjustable rate mortgage loan, but once the rate begins to adjust it may increase. Therefore you should refinance an adjustable rate mortgage before the interest rate starts to increase.
• The monthly payment for an IRRRL must be lower than the previous loans monthly payment unless you are refinancing an adjustable rate mortgage or the new loan term is a shorter amount of time than the old loan term, like 20 years instead of 30 years.
• For most IRRRLs the VA does not find it necessary to get an appraisal, credit information, or underwriting. Your VA approved lender may require these things, and if they do the costs can be financed into the new loan.
• The lender can usually close an IRRRL automatically, so it is not a complicated loan process like taking your original mortgage loan.
• If the loan that is being refinanced is over 30 days past due then the VA must approve the refinance so it can not be submitted automatically by the lender.
• If thee loan that is being refinanced is more than 30 days past due then the late payments and charges to bring the old loan current can be financed into the new loan. The costs that are involved if the lender has already begun foreclosure can also be refinanced into the loan as long as they are reasonable.
• Energy efficient improvements are allowed to be refinanced into the IRRRL. This means that if you want to purchase a more efficient furnace, put in new windows, re-insulate, or make any other home improvement that will save you money on utility bills in the future, then you can use the equity in your home and pay for these improvements with your IRRRL.
• There may be an increase in your monthly mortgage payment amount if you finance energy efficient home improvements, finance your closing costs, include the funding fees in the loan, finance points, or get a higher interest rate when moving from an adjustable rate to a fixed rate mortgage.
• Only as much as two points can be financed into the IRRRL at closing. A point is equal to 1% of the loan, and if you take more points on the loan then you can lower your interest rate.
• You can not take cash out with an IRRRL. You can finance home improvements for the purpose of saving money in the long run, but that money is paid back to you as a reimbursement after the work is completed and it must be within 90 days of the loan closing. You do not get cash out of your home with this refinance loan.
• If your monthly payment will increase by more than 20% due to home improvements, fees, closing costs, a shorter loan term, or other factors then the VA does require credit information and underwriting.

For more information on the VA IRRRL program go to www.va.gov

I received my property tax receipt yesterday along with a note:

Just a reminder that this parcel is delinquent for 2006.

WHAT! I’ve always thought that I was on top of all our bills. The key here, though, is BILLS. I didn’t actually get a bill for this property last year when I received all of the other tax bills. If I don’t have a bill for something, how can I know to pay it?

We bought the property last year, and the bill was sent to the previous owner. Now most local folks would probably forward tax bills to the new owners because that’s what us good guys do. But we bought the property as a foreclosure. The maga-bank who sold the property doesn’t waste time with details like, I don’t know, TAXES. They just tossed the paperwork.

Now I owe $75 in interest, and state law absolutely positively does not waive payments. Unless you’re the governor, I think. On one hand, I’m really frustrated. I would have paid those taxes one year ago. Where was the title company lady’s obsessive highlighter on the line item TAXES?

But on the other hand, I’m also thankful that one of the Treasurer’s secretaries took the time to write me a note. Otherwise, I NEVER would have known until the horrible day when I would receive this deadly note:

Your property’s up for auction due to dilenquent taxes.

Seriously, you only get one notice of taxes each year, and you only get one warning that you’re about to lose your property for unpaid taxes. Wouldn’t you think that maybe, just maybe, this year’s tax bill would have included a mention of unpaid taxes from the past?

So I’m writing a huge check right now and hand-delivering since 2007 taxes are due TODAY, and fees gets jacked up a notch tomorrow for late payments like mine. Thank goodness I mailed my taxes early this month and was warned! And even more thankfully, I’m glad property tax payments don’t make it to credit scores.

A lot of people love satelite TV, and I can understand why. What I can’t understand, though, is justifying such an expense every month.

I was looking at a row of houses built by Habitat for Humanity and started wondering. I’m not here to make judgment calls about these people’s habits, but I plugged in some numbers you and your friends might want to think twice about.

If you paid an additional $50 toward your mortgage every month, a thirty year mortgage could be paid off in 24 years! (I assumed a 7% interest rate, which is higher than you want for your own home.) 24 years!

Think about what a few extra bucks each month could do to any loan. Interest is a powerful thing, especially when it works to your advantage. Know of any other powerful examples?

(NOTE that some lenders don’t allow prepayments without penalty, so read the fine lines of the contracts you have signed.)