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Below is a sample of the expert advice you'll receive from Damon:

Damon, my student loans are killing me. Any thoughts?
Damon, why does my broker advise that I can get better returns if I invested in individual stocks?
Damon, should I buy a condo, townhouse, or single family home?
Damon, can you help me lower my payments?
Damon, How do I acquire the lowest payments on my mortgage?

Ask Damon:

Damon, My student loans are killing me. Any thoughts?

Currently I have about $77,000 in student loans. I have my payments automatically deducted from my checking account. Next year my interest rate should decrease from 8.25% to 7.00%. I didn't qualify for the previous years 4% interest rate. Do you have any ideas on how to pay this off? My job requires me to be on-call 24/7. Therefore, getting a
part-time job is difficult.

Signed -- "Educated Sister"

Damon Says:

The reduction in interest rate will save you approximately $962.50 per year or $80 per month. If you ‘d qualified for the 4% rate, you would have saved $3,272.50 per year or $272.70 per month. Obviously, the lower the rate the better. However, the interest rate is a small component of the problem.

The big problem is the $77,000 principal balance. You need to free up as much cash as possible to attack the principal balance with a vengeance. You have to get to a point where you can make over and above the minimum payment. When you make the minimum payment, you pay the maximum amount in interest and you remain in debt for the maximum length of time.

It’s not uncommon for people to have student loans that are older than their children are. I’m referring to parents who have children 17-years old. They do everything imaginable to keep the payments down on student loans. They consolidate them, they lower the interest rate, they defer them, they set-up hardship forbearance agreements. I know of many situations where people stay in school for the primary purpose of deferring payments on student loans.

Slow payments or no payments will hinder your ability to obtain mortgage financing for the purchase of your home. Sallie Mae will get her money. Tax refunds will be taken. Wages will be garnished. You cannot discharge student loans in a bankruptcy proceeding. The only way to get rid of student loans is by way of death, disability or "principal reduction". I encourage you to focus on principal reduction. ;-) The good thing is that you’re paying your student loan on time each and every month. You simply need to focus on PAYING IT OFF as soon as possible with or without the reduction in interest rate.

PS --Don’t confuse the advice in my "Ask Damon" e-newsletter with my comprehensive mortgage and financial planning services. Thoughts conveyed here are merely isolated answers to isolated questions. If you truly want to get an "ACE Grip" on "YOUR MONEY", you should consider my professional services.

Ask Damon:

Damon, Why does my broker advise that I can get better returns if I choose individual stocks?

I am a firm believer in investing in the market as a way to build wealth. I am striving to become a smarter investor. I recently read that investing in Index Funds (funds that follow the S&P 500, Russell, DOW, etc.) are promising ways to achieve gains similar to the overall market which historically has achieved double digit growth.

I contacted one of my portfolio "financial advisors" and asked him to sell a stock that I had already achieved a 30% return on and felt that banking on such a return in the next year may not be a sensible risk for me. I told him I wanted to invest instead in an Index Fund. He was vehemently opposed to me doing this. Can you help me understand why? Why does my broker advise that I can get better returns if I choose individual stocks with so-called Blue Chip companies that have cornered the market (at least for now). He suggests that such companies do not have much competition and many of the ones he recommends (or so he says) do well when the economy is down as well as when the economy is up. I know there are really not such stocks, but why is it that he refused to assist me in finding an Index Fund that would meet my investment needs?

Signed -- Female seeking to build wealth:

Damon Says:

This Jim Cramer want-to-be is ignorant, arrogant, or greedy – perhaps a combination of all three. He’s trying to convince you that he can time market fluctuation or that he has an eye for picking certain stocks. He can’t do either one. Neither can Jim Cramer. Neither can I. The name of Jim Cramer’s show "Mad Money" suggests that he know his advice is oftentimes insane. Ask him, was he able to predict the planes going through the world trade center on 9/11/01 that sent the market in a tailspin? Ask him, if he were to review the financial statements of Enron back in 2004, would he have known that they were cooking the books?

Individual stocks are not the investment vehicles of choice for ordinary everyday upwardly mobile people looking to beat debt and build wealth – which happens to be my core audience. If for a nanosecond, anyone reading this wonder if I would classify them as ordinary, let me explain. Regardless of your title, position and prestige, if you’re not on the Forbes riches 400 list, you’re ordinary in my book. If you just missed the list, who am I too judge..;-) I recommend mutual funds exclusively for several reasons. The primary reason being instant diversification.

When you understand the fundamentals of investing, there’s no arguing that index funds rank superior to just about every portfolio any asset manager has EVER constructed. Don’t believe me? Ask your investment broker what percentage of asset managers has a record of consistently beating the market --- If his answer is anything other than "less than 10%", he’s lying. When I say beating the market, I’m referring to the S&P 500 index which is the benchmark that most asset managers try to beat.

You dear madam, perhaps unbeknown to you, think that you can beat the market or that you have an eye for picking stocks. The fact that you’re in an individual stock aside – how do you know which direction this stock is headed? Do you practice fundamental analysis, technical analysis or "intuitional" analysis? Do you think that you have the ability to determine which stocks will generate a 30% return this year, next year and years to come? The good thing is that you're moving to index funds which are mutual funds that replicates a certain index. People like Warren Buffet, Peter Lynch and Charles Schwab (investment gurus) has stated publicly that most ordinary people will do well with index funds. I'm a champion for ordinary people. Natually, I'm a proponet of index funds.

As a matter of practice, my job is to "GUIDE" and let you "DECIDE". If the stock you're referring to was actually a mutual fund in my portfolio here’s some of the questions I’d ask BEFORE I purchased the fund – What’s the expected rate of return? What’s the historical rate of return? What’s the standard deviation – a risk factor that takes the expected rate of return into consideration and gives you a worse case scenario and a best case scenario? Lastly, what is the beta? A beta higher than 1 suggests that it’s more volatile than the market – you should expect a higher than market return. A beta less than 1 suggest that it’s less volatile than the market – you should expect a lower than market return. When I find something that fits my comfort zone and objective, I ride it like a camel’s back. I know I’ll see a lump or two (down cycle) but long-term it’ll get me to my destination.

America is the riches economy in the world. That being said, as long as you have a diversified portfolio your portfolio will earn money over the long-term. The key is not to do anything stupid like not being diversified. Once you have a diversified portfolio, what will ultimately determine your rate of return has little to do with which stock or mutual fund you select but how your money is allocated amongst stock funds, bond funds, and/or cash equivalents. I wrote an article about How to invest with confidence. Read it for more detail.

Ask Damon:

Damon, Should I buy a condo, townhouse, or single family dwelling?

I'm married with two young kids 2 and 4. I'm currently renting an apartment. We would be looking to purchase our first property in 6 to 9 months. I like this luxury condo that I visited sometime ago but I'm not sure if it make sense to purchase a condo as my first real estate property. It has most of the amenities that will make living there comfortable.

My question is, Does it make sense to move into a condo (basically another apt), townhouse, or a single family home?

Signed -- Man sick and tired of paying rent.

Damon Says:

In today’s real estate market, luxury condos/townhouses can be a great buy. A couple of years ago, I helped a family purchase a million-dollar condo in the Philadelphia area. When the appraisal came in on this property, my jaw froze wide open due to the 120-second WOW expression on my face. This place was immaculate.

My wife and I considered Condos and Townhouses when we were in the market for our starter home. Having grown up in public housing, then living in a dormitory, then living in apartments I had personally grown tired of having my living quarters attached to other properties. Therefore, we chose a single-family dwelling.

There's nothing inherently wrong with Condos/Townhouses. When shopping for a Condo/Townhouse be mindful of the monthly association fees. Most Condo/Townhouse establishments require that you pay a monthly fee for the maintenance of common areas. These fees are often over looked by would be homeowners. They can easily run you as much as $100 to $700 per month in addition to the mortgage, property taxes, and homeowner insurance.

As a general rule I encourage people to get their financial house in order first, then seek homeownership. The best time to buy a house is when you’ve paid off all consumer debt, you have money in the bank for emergencies and you’ve saved at a minimum 5% for a down payment. I’m successful at convincing perhaps 1 out of every 500 people to follow that advice to the letter. Homeownership is the most influential financial goal. Patience tends to take a back seat to a person's desire to purchase a home.

If you don’t have the patience to become debt- free with money in the bank for emergencies before purchasing your condo/townhouse, please follow this advice – The payment on this property including mortgage, taxes, insurance, and association fees should not exceed 35% of your take home pay. Preferably, you would want to keep this payment at around 25% of your take home pay. Why? Because you still have to keep the lights on, feed and clothe the family, have money for recreation plus save for retirement and college among other things.

Ask Damon:

Damon, I need help lowering my payments.

I recently refinanced my home to payoff some delinquent bills and to get some extra cash for needed home repairs. In order for me to get the loan, the loan officer told me I had to payoff a car loan that I cosigned for my son. The balance on the loan was $11,000. I did this deal thinking that my son would pay me the $300 monthly car payment. He’s now considering trading in the car for a 2007 model. The car dealership said they’d give him a trade-in value of $7,000 for the car. My payments on my mortgage went from $280 per month to $530. I’m currently in school and working part-time with a monthly income of $1,000. Without the $300 monthly income from my son, I’m not sure I’m how I’m going to pay my bills. Can you help me lower my payments?

Signed -- Stressed out mom from PA.

Damon Says:

I get the impression that you, your son or both fail to realize that your son owes you $11,000. When you paid off his car loan using the equity in your home (which was a bad idea), you in effect became the new note holder. Your son financing a new car is another bad idea. Borrowing a phrase from Bobby Brown "That’s his prerogative". I would not allow him to trade in the car. You should sell the car and get as much of your $11,000 as you can get. He can go forward with financing another car minus the $7,000 trade-in-value.

Looking at the numbers, I think you have more of an "income problem" than you do a "payment problem". The good thing is that you’re are in school. I imagine you’re seeking to increase your earning potential. Hopefully you’re graduating soon. Upon selling the car, place the money in the bank and draw down $300 to $400 per month to help supplement your income. This will buy you some time to focus on your schoolwork. If the balance on your account gets down to $1,000 before you’re finished with school, I hate to be the one to tell you this – YOU CANNOT AFFORD TO WORK PART-TIME.

Never under any circumstances should you cosign for anyone with the exception of your spouse.

In due time, your credit scores will be higher and you'll be in position to refinance for a better mortgage.

Damon, How do I acquire the lowest payments on my mortgage?

I refinanced in Sept 2006 and paid off all my debt. However I took on a higher payment ($1,365 to $1,658). The loan has an "interest only" feature for 2- years after which the rate adjust every 6-months. My monthly take home pay is $2,200. What are my options regarding acquiring the lowest payment possible? I would like to rent it out in 2 to 3 years. The average rent in the neighborhood is $1,300-$1,500 Can you help me? What do you suggest

Signed -- Man in dire need of "Wiggle Room" within the budget

Damon Says:

Interesting enough on the cover of "Business Week" Sept 06, there was a picture of a venomous snake wrapped so tightly around a house that the house began to cave in. In Bold Captioned it read - How Toxic Is Your Mortgage? The subtitle was "Deceptive Loans. Phantom Profits. And coming soon: A wave of Defaults. This article confirmed what I've been saying for years -- Some mortgage products are hazardous to your wealth.

Did you know that the origin of the word mortgage has the same origin as the word mortician? The literal meaning of the word mortgage is "Death Grip". I’m in the business of helping people get an "ACE Grip" on their Mortgage and their Money. Keep that in mind as you read the answer to this question.

You get the lowest possible payments on your mortgage by doing exactly what you did – taking out what those of us in the mortgage industry refer to as "exotic mortgages": Interest only mortgage, Option-arm mortgage, 125% mortgage and 40 and 50- year mortgages. I would NEVER place a client of mine in one of these products! Someone who opts for any variation of these exotic mortgages is saying out loud, this house and/or this lifestyle is more than what I can afford right now.

As far as renting this property out, why would you rent out a property with negative cash flows? The payment on this ticking time bomb low payment interest only mortgage, which is subject to payment increases, is higher than the projected rental income. Not to mentioned maintenance, repairs, vacancies etc. Do you want to have the title "real estate investor" or do you want to make money investing in real estate?

I'm hoping that your take home pay describe herein is indicative of one paycheck and that your monthly income is actually $4,400 per month. If not, how are you eating?

Based on the details presented, I think this house may be a bigger bite than what you can reasonably chew. As of right now, all you can do is pay the mortgage, pay the utilities and put gas in the car. You should get yourself into a housing situation where your mortgage is on a fixed rate and the monthly payment including taxes and insurance are no more than $1,540 – assuming a $4,400 monthly income. After all, there's more to life than making mortgage payments! If you cannot get into that situation with your existing home, you should consider selling the house.

You should strongly consider my ‘FREE Mortgage Checkup" services where I’ll personally evaluate your mortgage to see if I can help you. Those who hire me to assist them with their mortgage needs are entitled to a FREE "Extreme Money Makeover" Financial Planning session.