July 9, 2012
I’ve been, in the back of my mind, in this weird mental contortionist sort of way, staring at certain big areas of our required expenses to cut down drastically.
The cable, phone and internet package was finally pruned back. We’ve chucked Comcast’s outrageous packaging of 151 channels of which 115 are crap or can’t be understood linguistically, anthropologically or by any stretch of the rational mind, just so that we can watch a few of the shows we enjoy having on in the background.
Thanks again to patient stalking of Fatwallet, I’d found an AT&T dryloop deal for $20/month for high speed internet alone. A neighbor was kind enough to confirm that the service was decent and didn’t need a single frill or frippery like phone or anything else to work properly.
So that was progress.
The next best thing was to tackle the mortgage because rates are really low and if I wanted the biggest bang for our time, that right there would do it.
Not so much.
Of course I did some basic research into rates on offer. I was astounded at the lack of attractive refinance options.
I know it’s not 2004 anymore, but I expected to put down a 20% down payment which would bring the loan down a substantial amount and figured we could get:
1. A reputable lender
2. A rate under 3%
3. Zero points
4. A lower monthly payment
I may have been delusional. Bankrate’s possible offers were pretty bad. Mostly the loans were:
1. With odd lenders
2. Between high 2% to mid 3%
3. Either zero points up through 3.5 points
4. Up to $400 more per month
5. Up to $15,000 in closing costs
Then I ran the numbers on INGDirect. And Lo! The sun had come through the clouds.
1. Easy Orange – 5 Year Fixed
2. Rate: 2.625%
3. Zero points
4. $600 less monthly
5. Approximately $2,000 in closing costs
6. Option to renew in 5 years with same closing costs and same rate
I had all the initial information up front and it sounded good. It warned me about a Final Payment “larger than the rest”, amount unspecified, but that didn’t seem unusual. Like most loans, I expected that a last payment would be at least a few times larger than the rest.
Bear in mind that I was cramming this into one of our endless days and nights. Goes something like “drag out of bed, work a really long day, try to eat at least one meal, rely on PiC to take care of Doggle morning and night because I will pass out if I do one more thing that’s not strictly necessary to sustain life, fall into a coma.”
I completed the mortgage application over dinner one night.
The detail I missed, the big glaring flaw I overlooked, was that it was a 5 or 10 year fixed rate mortgage based on paying over 30 years principle and interest. Says right there on the page.
So as it turns out, the “Final Payment” was a Balloon Payment. They just chose to use different language and I didn’t twig to the obvious.
With the payments artificially strung out across the supposed 30 years, by the time we reached the end of five years, we’d effectively have made zero progress. It was completely counterproductive.
Yes, I absolutely assumed it was down to the lowered interest rate that we were getting everything we wanted: lower rate, lower payments, and paying off the whole kit and caboodle in a shorter time frame. Yes, I was insane with fatigue to have failed to see how the real math was going to play out.
Lament: Could they not have just used the phrase Balloon Payment like normal people?
What this all means now
Option 1: Take the loan but pay up to the same monthly amt we’ve been paying. Doesn’t reduce our monthly costs which was my real goal but gets us the lower rate. Very little progress and eats up a good portion of our cash but we’re doing something. And at the end of the five years, I’ll still need to refinance because who’s going to have another some hundreds of thousands to pay that off? I’m good but I’m not that good.
Option 2: Don’t take the loan and start brainstorming again. (No action)
Option 3: Don’t take the loan and just use my Auto-Payoff tactic of throwing large chunks of money at the debt, but that also doesn’t really get at my real goal either.
My short term goal is to reduce our total monthly cash flow; the long term goal is to pay off the mortgage. Going the Auto-Payoff route only deals with the long term and doesn’t do anything for the short-term. And may actually destabilize our short and medium term positions.
Honestly I’m rather undecided what to do just yet – other than to call and clarify a point or two about the loan.
January 19, 2010
I forgot to add the Lending Club account to my net worth snapshots, so I’ll be adding them this month under the investment services tag. I’ve had the account for about 5 months and forgot about it since I only funded it with $50 of promotional money.
Pictured above is my 2009 year end review. So far, my only note, a Grade A paying 7.74% note is coming along nicely. I wish I’d had a chance to help fund MoneyFunk’s loan, it would have been nice to help out a fellow blogger but she whipped up 85 borrowers and fully funded in 16 hours!
I’ll go ahead and check out potential new loans this month to commit another $100 or so to it. I’m sticking to A grade loans, I don’t have any need to take major risks for an additional 5% at this point, 7-9% is perfectly adequate.
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Daily Exercise Update: Ran many errands in the cold and wet. If I were in this for the weight loss, I’m sure I burned many calories trotting from store to store, and a bonus sum from shivering. I’m not so I’m counting it as stiff upper-lipping in nearly-extreme weather conditions instead.
February 3, 2009
The truck sold. What’s next?
Well, I’m pretty sure that the sale price didn’t come close to breaking even against the amount of money I’ve expended on the truck payments since last July, I’m not even checking, but it did cover the lump pay-off sum of $2356, with some cash to spare.
The question is: what do I do with that “extra” money?
My first reaction was to kick that money over to pay off the family car. It’s just about the right amount to pay it off, and would remove one more loan from the family resources. (That car is currently my parents’ responsibility, and not under my name.) It would free up cash flow about 7 months earlier than expected.
My second reaction was to put it in the emergency fund because I’m neurotically squirreling money away.
My third reaction was to leave it in the expenses fund because that’s where the money came from in the first place, and I’m a BIG fan of paying myself back.
Lastly, there’s a hybrid option. I could give them some partial assistance monthly, depending on how much they need to break even between my mom’s (piddling) disability money and my dad’s erratic income. By my calculations, it appears that they should only be running short a hundred or so each month until April. At that time, another monthly obligation falls off the balance sheet, and they should be fine with regards to the few debts I don’t pay for them.
As much as my gut reaction is just to pay it all off, I don’t want to nip this budding sense of responsibility that my dad’s developing. I want to encourage him to work with me because I’m just not up for ANY more shenanigans.
Thoughts?
January 31, 2009
I’m calling in that 5k loan that was earning “interest” for me by working off my dad’s debt to the borrower. Uh, yeah, so how does that work?
The borrower lent my dad money years ago during the beginning of our family’s rough times. A few years later, he asked my dad if he knew anyone with ready money to loan him and offered generous terms for interest. Instead of paying the interest himself, he asked my dad to pay his debt back by putting up the interest money, if a lender was found.
I thought it was weird because the amount seemed piddling when you considered he was running an import business. How could he not easily raise/borrow $5? I guess the man had credit problems on paper, but the opportunity to keep the money in the family was there and I took it. That was four years ago.
Now, Dad’s debt is “paid” down, and the principal is owed back to me. I know that business is bad for him, it is for everybody, but I can’t take the risk of waiting longer – I was dumb enough to make the loan sans paperwork. We didn’t set a due date for the money, either.
The whole thing was pretty weird. I don’t know this guy well personally, but he’s been fairly generous to my dad over the years. That’s not to say he was outright charitable, he simply tried to set him up with business opportunities when available. Originally concerned that people would assume I had money, I wanted to remain anonymous; Dad was the intermediary since he was involved by dint of the interest anyway.
Yeah, of the pantheon of my stupid money decisions…… anyway, no matter how it ends, I won’t be making that mistake again. (Knowing me, I’ll find a more original dumb decision!)
By virtue of his and Dad’s friendship, I’m pretty sure that the money’s coming back but there’s still a niggling doubt until that cash is in my hands. Since the debt Dad owed is more than square, there’s no need to stress any longer; contact has been made and he’ll be calling on Sunday to work out the terms of repayment (ie: the dropoff of money).
Time for that loan money to come home! (And potentially to be spent as moving money!)
November 27, 2008
Is it really Thanksgiving? Happy Thanksgiving, all!
I took to my bed on Tuesday evening, and have only just emerged for a short spell today as my fatigue permits. This is the first time I’ve really been able to form cohesive thought in any sort of linear pattern. Mutant virus, indeed! Whatever this is, it hasn’t let up its grip so I’ll likely pass on all but the most superficial examinations of the Black Friday ads. (Except for the laptop sales, friend keeps calling me with new updates and I can’t resist peeking, at least. But do I really have $600 to spend right now? Before tax? It’s not an impressive bargain but the machine is really quite nice and it’s not likely I’ll have a better deal popping up before next Turkey Day. Well, that’s a debate I haven’t the energy for, and pretty soon it’ll be a moot point.)
I did manage, however, to pay a couple bills and get the CarMax estimate from my dad who took the truck in for the appraisal for me. It’s nothing outstanding, of course, and I’d expected a low amount but actually seeing the appraisal come in at a cold $3000 still took my breath away, a bit. Wow. That little? *shaking head* I’d allowed for the probability. And knew it was likely. That amount will neatly clear the loan with a tenner to spare, or something like that. It may not even be worth the effort of taking it to the dealer for a buyback estimate, but that’ll only cost time, right? If I can muster the energy to leave the house by Saturday, it’d be lovely to have the truck issue resolved.
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A few articles I’ve enjoyed in brief moments of lucidity:
Guest post by Living Almost Large at Clever Dude‘s on Thinking Poor?: it’s definitely a mentality that I’ve been weaning myself off to focus on achieving goals and a positive perspective.
Guest post by Jim of Blueprint for Financial Prosperity, also at Clever Dude‘s on Emergency Funds: Don’t know why I never get tired of thinking about emergency funds. Comforting to know it’s there? Just a couple weeks ago I debated creating a CD ladder, but committed to a single, smallish CD to help offset the lowered interest rates on my “high-yield” savings accounts.
I also liked LAL’s post on Moving for a Job: she asks questions that are very important to consider in the course of making that decision.
Frugal is running a fun little series on blogging about PF. Yep, very meta, she’s PF blogging about PF blogging. In Part 2 she asks about the spender/saver split and where her readers fall on either side of the divide. I think we’ve collectively built a bridge, myself!
Clever Dude’s co-author, Shawn, talked about his experience grooming his elderly, thick-coated dog. I had to laugh because my elderly, thick-coated dog has had to endure some similar bad-hair summers thanks to my adolescent enthusiasm and certainty that she’d rather be cool and comfortable, if a little weird looking. Turns out, she’d rather be overheated and not embarrassingly poorly groomed. Unfortunately for her, I really do enjoy the hands-on grooming, shampooing and all of my pets, so even though I won’t try to clip her coat ever again, she still gets bathed at home.
The NY Times runs an article on the New Medicaid rule that would allow states to charge premiums and higher co-payments for services and goods previously provided at no cost (I think) to low-income people. I can understand that states would need to recoup some of the cost of care in order to continue providing it, but I can also see how even nominal fees would become prohibitive. That latter point is actually what proponents consider a bonus, that people would use the services less and reduce the burden of cost and thereby freeing up the services for a greater population, but it’s also a rather cold, bottom line point of view. I can’t argue that it makes economic sense, it just can’t take the premier place in the consideration of how to address the problem.
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And I’m exhausted again, so off I go! Hope everyone has a wonderful holiday weekend!
November 12, 2008
I don’t think I’m going to succumb, but feel a little weak in the will at the moment. I know we’re playing Emergencyopoly, or just saving my butt off, but this month’s bedeviling loan statement came in and the balance is only $3130. Once that’s paid off, I free up almost $400/month of cash flow.
Then, “inspiration”: Why not pay it off now? Then I free up that $400/mo now, and stretch the e-fund by $2400.
Internal debate:
Well, not really, that $3000+ has to come from somewhere, doesn’t it now, silly girl?
Erm … efund?
No, NOT an emergency.
But *squinch* … better cash flow?
No. Less emergency money and you’ll have to make up for it by saving that cash flow anyway. Same end product.
It’s so tempting to take the cash and pay it off.
But, the interest rate is very low (1.9%), I’ve only about 8 more payments to make and this move is clearly motivated by antsy impatience. The cash on hand is more important than getting rid of a single payment (probably). Slow and steady saving and payments may win the race, but sometimes I crave a big splash of change to fend off that plateaued feeling.
April 30, 2008
| Retirement Savings |
Rollover IRA: $1,357
Roth IRA: $3,669
401(a): $3,742
403(b): $16,129
Total: $24,897
|
| Emergency Savings |
15,004
|
| Goal Oriented Savings |
Car Maintenance: $21
Savings for taxes: $4,800
Total: $4,821
|
| Investment Loans |
Prosper-ish: $12,630
Personal Loan: $5,000
Total: $17,630
|
| Total Assets |
Non-Liquid: $24,897
Semi-Liquid: $17,630
Liquid: $19,825
Expense Acct: $3,691
Total: $66,043
|
| Debt and Liabilities |
Truck: $5,847
Citi: $2229
American Express: $153
Chase: $358
Rent: $1,360
Total: $9,589
|
| Net Worth |
$56,454
|
Most of my gains were due to retirement contributions during the two months between this and the last snapshot I put together. I’m surprised that I, at least, kept the amounts I contributed, considering the market’s performance. Still need to re-examine my allocations, using Moom‘s Madame X series as a guide.
I’ve paid my tax bill, which was offset by a state refund, so the cash situation is half settled. I haven’t received my rebate yet. At that point, I think I’ll decide what to do with the lump sum of tax savings money. It’s mainly going to be divvying it up between the other smaller savings/expense accounts that have been neglected until now: auto maintenance was drained, insurance is perpetually lonely, the intermediate emergency fund has been languishing, and a little has to be set aside for upcoming Con. If there’s anything left after those are taken care of, I’d love to open a vacation/fun fund. That’ll be a first!!
Oh, and I need a moving out fund. I vaguely envisioned funding that from paychecks and miscellaneous income through the rest of this year, since the other major savings goals may be set. Regardless of the source, I need to set an actual number for that.
