I have a 15 year mortgage at under 3% APR (I think it's like 2.6% but the wife knows more than me). It's about $1,400 a month payment. I'm trying to get it paid off in half the time though so my house should be paid for by the time I'm 35-36-ish. If you can it makes sense to make extra payments on your home. The potential for equity building outweighs any other argument for paying the general "on time" payments. Plus you will constantly knock down the interest, thus lowering what you pay overall.

Just bought my only brand new car ever in 2011. Was kind of out of necessity. I'm paying extra on it too and will have it paid off next year a year ahead of time. I plan on getting my "fun" car then, but after I get that I'll be back to old used vehicles.

Credit cards are fine to have. I don't understand the stigma behind them. Anything charged to a credit card is paid off that month. Never pay the minimum bill, nor even pay something extra on the bill. Pay all of it. That's the key. You charge something to a credit card, you pay it off immediately when the bill comes in. Always. Builds credit like something fierce. I know people like to say they "pay with cash" and stuff like that. But if you have the means to buy it with a CC, do that, THEN use that cash to pay off the CC immediately. I'm telling you that's the way to do it, and it's a lot better than just "paying with cash." Just see.

I paid my wife's and myself's college loans as we went to school. At one time I worked three jobs and went to school full time. Had no free time, slept maybe three hours a night, and lost a lot of friends and working did strain my relationship a bit, but that's life. The results outweighed everything else. I paid off her school before she graduated (two BA degrees) and paid my last payment the month I walked (BA). She's going back for a Masters - maybe I will too eventually as always a good thing to up your education - and we'll just pay every semester as she goes. Best way to pay for college is as you go along. Don't incur a loan.

We save. Everything we can. I can pay the house payment for three straight years if needed. Sure there are things I want. Wouldn't mind a new 'Vette or something like that & would just like a new fun car to play around in. But I also know stuff like that is just useless possessions driven by personal want and I have sense in my head so I'll wait. I love Fieros, but at the end of the day 99% of the population couldn't give two flips if you drive a Fiero or a Ferrari. They really don't. If you believe that it's due to your own devices of what you think others perceive you as should be being. Live within your means, not by what you think people should view you as having to be "in".

I'm not planning to retire early, but I'm already putting money aside for retirement and have been for a while now. I did this even while paying for college. If you're nearing 30 you need to be doing this at least a little bit.

Other than that I buy nothing I don't need. That's just unnecessary crap that eventually piles up. But I do have fun from time to time. Nothing wrong with that.

I agree with what was posted some posts above about the need to be taught more as a child about how to handle money. I find it absurd that this is not taught in grade school education. By the time children are in high school, it's about time for them to really be taught how to handle money. I was taught the hard way. I came from a well low class background riddled with poverty, and told myself when I became an adult I wouldn't go back. The only way to do that is to work hard every day and at everything you do. Handle it like a boss.

quote Originally posted by ls3mach: 1. Where did you get that interest rate? I'd like to look into getting a similar rate.

These low rates were available for the first part of the year, but they have gone up recently. I re-fied my mortgage earlier this year @ 3.00% for 10 years. Only debt we have, all cars paid for, no credit card debt. Helps that I only have older cars!

First thing I would recommend to anyone is saving 6-12 months of expenses for your emergency fund. Takes a lot of the worry out of life......

Tony

I was trying to decide whether or not I should refinance my own home. I have an interest rate that is ~5.2%, but I got that loan back in 2003 when that was actually a good rate to have. So... I thought about refinancing, but I've already been paying into my mortgage for 10 of the 30 years. If I refinance now, will I actually end up saving any money since I'm paying a lot more principal now than I was before? Or, would I just be better off dumping more money into principal rather than refinancing?

quote Originally posted by 82-T/A [At Work]: I was trying to decide whether or not I should refinance my own home. I have an interest rate that is ~5.2%, but I got that loan back in 2003 when that was actually a good rate to have. So... I thought about refinancing, but I've already been paying into my mortgage for 10 of the 30 years. If I refinance now, will I actually end up saving any money since I'm paying a lot more principal now than I was before? Or, would I just be better off dumping more money into principal rather than refinancing?

To drop more than 2 points? ABSOLUTELY. You'll have to crunch the numbers yourself, likely you will get a 15 year note with a bit lower payment. Make sure not to cash out any equity. Also watch for closing cost, but even then you likely will come out thousands ahead. I can do a basic number crunch if you like.
EDIT. Crunched the numbers at 200,000$ you need to get 3%APR or lower and it will ad roughly $40 a month to your house payment and shave 5 years. If you watched closing cost, likely do well, otherwise meh.

[This message has been edited by ls3mach (edited 08-22-2013).]

quote Originally posted by ls3mach: To drop more than 2 points? ABSOLUTELY. You'll have to crunch the numbers yourself, likely you will get a 15 year note with a bit lower payment. Make sure not to cash out any equity. Also watch for closing cost, but even then you likely will come out thousands ahead. I can do a basic number crunch if you like.

Ok, thanks!

I currently owe $174,000 on the house. The loan was for $245,000. Zillow lists the house for $380,000... but I figure it's more realistically like $310,000.

Interest rate is something like 5.2% and change, we'll say 5.3%.

Mortgage is for 30 years, I've got 20 years left.


Thanks!

quote Originally posted by 82-T/A [At Work]: Ok, thanks! I currently owe $174,000 on the house. The loan was for $245,000. Zillow lists the house for $380,000... but I figure it's more realistically like $310,000. Interest rate is something like 5.2% and change, we'll say 5.3%. Mortgage is for 30 years, I've got 20 years left. Thanks!

Oh, this changes my previous edit. Your principle and interest should be around $1360.50 at your current rate. If my math isn't shoddy, looks like you've paid extra on the note as you should owe around $200,000 after 10 years.

If you could get a 3% fixed 15 as a couple people have stated in this thread, your new payment would be 1201.61 P&I and you'd shave 5 years. If you continued with the extra $158 in savings you'd have it paid off in around 12 years.

I'd probably go for it if you can find 3% or around that. Make sure it is a fixed 15 or less years.

Todd,
Bankrate.com has a fantastic mortgage calculator. Even list amortization schedules and allows for extra payments to be calculated.

[This message has been edited by ls3mach (edited 08-22-2013).]

quote Originally posted by ls3mach: Oh, this changes my previous edit. Your principle and interest should be around $1360.50 at your current rate. If my math isn't shoddy, looks like you've paid extra on the note as you should owe around $200,000 after 10 years. If you could get a 3% fixed 15 as a couple people have stated in this thread, your new payment would be 1201.61 P&I and you'd shave 5 years. If you continued with the extra $158 in savings you'd have it paid off in around 12 years. I'd probably go for it if you can find 3% or around that. Make sure it is a fixed 15 or less years. Todd, Bankrate.com has a fantastic mortgage calculator. Even list amortization schedules and allows for extra payments to be calculated.

Yeah, it's not been SO organized as that exact amount extra every month... but I've rounded up to the nearest 100 each time I pay. I really should spend more time looking at the bill, because I actually pay more like $2,300... but that's because I'm also paying escrow which handles the taxes (about $5,000 a year) and the insurance (Also about $5,000 a year due to hurricanes).

I'm really going to have to look into that...

I know that whenever they've said "Ooops, our calculations were wrong, you paid too much into escrow!" and then they ask us if we want a check, I usually just put that right back into principal.


Thanks for running the numbers for me... I appreciate it.

quote Originally posted by 82-T/A [At Work]: Yeah, it's not been SO organized as that exact amount extra every month... but I've rounded up to the nearest 100 each time I pay. I really should spend more time looking at the bill, because I actually pay more like $2,300... but that's because I'm also paying escrow which handles the taxes (about $5,000 a year) and the insurance (Also about $5,000 a year due to hurricanes). I'm really going to have to look into that... I know that whenever they've said "Ooops, our calculations were wrong, you paid too much into escrow!" and then they ask us if we want a check, I usually just put that right back into principal. Thanks for running the numbers for me... I appreciate it.

I shave my face now!!!!

quote Originally posted by Old Lar: I use this for many gas purchases. The store I use also has special items by one and get $0.05/gallon off. Yesterday I paid $3.11/gallon at the Shell station using a $0.31/gal discount. The best I've done is getting $1.25/gal discount. Groupon has had programs $10 of gas for $4 gift card.

Sound like you have a couple of extra perks at that store. We only get, spend a $100 get .10 off per gallon. They give you another .10 per gal off every time you spend a $100. But you have to use them by a certain time or the expire....

Don't get me wrong, when every dollar counts if you can get a discount on your gas for spending money you would have anyway, good. But I'm seeing some people get excited about saving $2.00 at the grocery store compared to the convenience store across the street. rational.... $100 spent to save $2.00 vs paid $2.00 more for a tank of gas at the pump but $0 in the store.

I crawled out of debt a few years back, documented it right here.. now that I have opened my business, I have tripled the debt I used to owe and floating 300 dollar minimum on my credit card... and I look back to a time wistfully to a time when I could pay my financial indiscretions off just working in a kitchen of a local restaurant, but had no real obligations or debt. And I have less free time now, too... but I am also less greasy.

quote Originally posted by ls3mach: I'd be interested in knowing who you got that rate from, this would be a hugely awesome thing to stumble upon.

Small local bank, Madison Bank, dealt with them for years. I actually missed a lower rate, when I first called, he quoted me 2.75% on a Friday. I called back on Monday to lock it in, and it had gone up to 3%.

Tony

quote Originally posted by ls3mach: 1. Where did you get that interest rate? I'd like to look into getting a similar rate. 2. Interest on a home loan is paid first, how much in dividends are these blue chips paying? I don't know any of your specifics, but mathematically that might not be a sound theory. Just curious if you can give some examples of how this is working, don't need your specific numbers.

1) Bank of Internet through Costco. I re-fied in the June/July 2012 timeframe. The mortgage was promptly sold to Wells Fargo, I fully expected my mortgage to be flipped but for the rate I didn't care

2) A few call outs.....I can deduct the interest expense from my taxes, I must pay tax on dividend interest from stocks. Two specific examples I use for blue chips....for dividends JNJ pays ~3.00 % , GE~ 3.20%. Granted the div. rates change based on the stock price but it works for me, but if the stock price goes down the dividend yield rate goes up! For this year both stock have done well over the past year JNJ +~25% and GE + ~20%. If you were to remove the stock price increase both yields would be ~4%. In actuality as it works now when I put my extra money in GE instead of the mortgage I make ~3/8% more and I get to keep a greater deduction on my taxes since the interest on the loan is deductable. I am not playing games and cashing out equity from my residence, nor am I making risky investments. I am just keeping my mortgage balance as high as possible since it is so cheap to put my extra cash into higher paying investments.

The ideal will be when interest rates start increasing and I can get a municipal bond (rated A, AA or AAA) that pays 3%+ that will be the ticket. Dividends on muni bonds are tax free so many money I make is 100% mine and I will also still be able to deduct the interest from the mortgage.

I am not about get rich quick scams, but I am about taking advantage of margins of historically proven investments versus locked loans and also minimizing tax exposure. To me it is common sense and not risky.

Don't get me wrong I do have riskier investments other than blue chips but for what I would normally put extra in the mortgage I now put into the market. I try to be a smart investor. My advice is to sell stocks if you may need cash in the next few years, sell stocks now. Back in early 2009 when the Dow was in the low 7000's many folks were selling "scared; " on the other hand I changes my contributions and for the first six months of the year and put in 50% pay into a my 401K; it hurt me to take that much out of my normal budget. I had to cut out almost all non essential spending for the period, but today that money has essentially doubled in less than five years.

To me, to keep out of debt and start building wealth you don't need to make a lot of money; you just need to be smart with your money and grab opportunities. While I am not rich I make a fair wage but I do plan to be rich but letting what income I do make work for me.

Some folk may work and make a 100K a year, and to most that is rich. But it isn't rich if you spend 110K a year. If the next person is paid 50K a year, spends 40K and invests 10K and get dividends from investments of 5K a year that turns into a 15K surplus annually; over 10 years you will have 150K and that is without considering compounding interest of the money earned over those 10 years.