Mortgage debt relief refers to a new bill that was passed on Friday December 14, 2007 called “ The Mortgage Debt Relief Act of 2007. This bill offers a bit of breathing room for those people that are going to lose their home due to a foreclosure, or sell their home on a short sale.

This act will help homeowners that had sub-prime loans. Many of these people are ending up losing their homes because as the rates move up, most people are in a situation where they can no longer afford their mortgage payments and may possibly lose their home.

Before this act was passed, the homeowner that had their mortgage forgiven still had to pay tax on the forgiven loan. That meant that if they sold their home at a cost less than their mortgage amount, a short sale, they would have to pay the tax on the difference between the mortgage value and the sale price. This new act is good news for home owners that were forced into foreclosure, because since the tax is gone, they can sell the property at less than the cost of the original mortgage and not go into further debt. The banks are more likely to consider selling a house at less than the mortgage value because there is nothing being gained on their side by just holding the house. On top of that, the bank must also pay for a property manager to take care of the house, and pay for normal upkeep of the house.

When the house is sold as a short sale, there is no record as there is when there is a foreclosure. It is a benefit to all parties involved to sell the house for less than the mortgage price, and passing this act has made life much simpler for the home owner with a mortgage problem.

Financial planning is a very broad topic. It includes things such as budgeting, debt management, retirement planning, etc. Here are four tips to help you with the basics of financial planning.

1. Budgeting is a very basic component of financial planning. You need to know how much money you have coming in, how much money you have going out, and the difference between the two. Preferably, you need to have a positive cash flow. If you find that you are spending more than you make, then you need to make efforts to decrease your expenses and/or increase your income.

2. Get out of debt. After you have created a budget and determined what your cash flow situation is, you need to make a plan to get out of debt. Having too much of a debt load is a financial burden, and can cause you trouble if something happens that is unexpected, such as health issues, unexpected repair bills, or divorce.

3. Contribute to retirement savings. Fewer and fewer companies are offering pension plans, and Social Security is not a guaranteed option. You need to be saving for your retirement and planning for the future. You also need to take into consideration that people are living longer these days and so your money is going to have to last you longer.

4. Make sure you have enough insurance coverage. Once you have created a budget, cut down on your debt, and started planning for retirement, then you will need to make sure that you have enough insurance. Not having insurance can destroy all the hard work that you’ve done in trying to get your financial affairs in order.

You need to take into consideration what your needs are as far as health insurance, life insurance, home owners insurance, etc. Don’t be tempted to cut back on your insurance coverage simply to save a few dollars. One disaster is all it takes in order to regret that decision.

If you pay attention to these four basics of financial planning, you will find yourself with a lot less stress and with a lot more financial stability.