Just got our "house" credit card bill this morning, and noticed a VERY sexy box full of information on there ;) Which is funny considering we now have some credit card debt as I mentioned last week (I blame you Europe).

I'm not sure how many of you were reading this blog last year, but I had gushed all about these new c/c rules and got slammed pretty hard for it. There may be one or two that I'm not *as* excited about as I was initially (the over 21 rule specifically), but for the most part I stick by my HELL YEAH! attitude :) Of course we're gonna get slapped with nasty late fees/returned checks/etc if we don't pay attention, but you can't deny this sweet picture I'm about to show you! HOW COULD THIS BE BAD???:

(A snapshot of my actual credit card statement from USAA, minus the awesome doodles)



I mean come on, look at those sexy statistics! You think people are going to just overlook that and not think twice? Maybe the first few months, but overtime it will sink in and at LEAST shave off 5%+ their spending (I'm making that up, but I bet some economist will prove it!). I have absolutely no problem with these new additions here and I REALLY REALLY hope this gets people to wake the F up.

Shopping is fun & exhilarating, I get that - but guess what, so is financial freedom. I stick with you, dear credit card changes. Let's rock this together.

Labels: credit cards, interest

Paying for debt blows, but finding new ways to keep motivated doesn't :) And this morning I came across a BRILLIANT way to help put things in perspective! (Or perhaps give you a heart attack, I'm not sure which)

It comes from a good blogging friend of mine, Matt Jabs, and what he does is simple - he calculates just how much interest he's paying on his debt EVERY SINGLE DAY! All his mortgage interest, credit cards, loans, everything. And want to know what it's costing him? A whopping $40.13! And he gets squat from it in return. How's that for motivation? Knowing you're giving up $XX every single day until you pay it all off? Freakin' crazy mang - puts a whole new realization of what debt's doing to ya. (and yeah I know, I typed "mang" instead of "man" - I can be ghetto like that)

Now since I'm projecting Matt's debt all over, it would only be fair that I do the same ;) We don't have credit card debt or any loanage (thank God), but we certainly have mortgages up the posterior! And they come in at a pricey $350k at that.

So if we extract the total monthly interest we're paying ($1,800), and then divide it by 30 days, we're paying......drum roll please....$60 every day for our debt! WOW. That's seriously incredible to see it laid out like that, and it's not even including principal! I honestly thought we'd hover around $30-$40 a day just like Senor Jabs, but this REALLY puts things into perspective. $60 every day evaporating into thin air - unbelievable.

I highly recommend breaking it down yourself and seeing how it affects you. And if you're in the mood, dropping it in the comments and letting it out for all to see. Perhaps it would feel good? ;) Either way I think knowing this # could really help step up your get-rid-of-debt gameplan.

And if this interests you as much as it does me, check out Matt's "How much your debt costs" spreadsheet! I'm going now to add it to my best of templates/spreadsheets because I think this is some really really good stuff. You know I love me some tracking!

Labels: debt, get motivated, in the real world, interest, tools and resources

I know I've been on a Credit Union kick lately, but I can't help myself. There are just so many benefits! Regardless if you buy into the whole "move your money" movement or not, it's still good to know we as consumers have options.

Jim @ Bargaineering had an excellent list of 10 reasons why credit unions kick ass, and I totally stole it cuz it was that good. In fact, I'd also like to add 1 more to the list! So here are his 10, along with my 11th addition. You can click on his link for future explanations too if you're curious - he goes more in depth for each category - but here's the A.D.D. version:

1. Better interest rates on loans.
2. Personal loans are more likely.
3. Better interest rates on deposits.
4. Lower fees.
5. Fewer customers, better relationships.
6. Fewer customers, you're more important.
7. No call centers.
8. You can be involved at a credit union.
9. NCUA insurance.
10. Less profit-driven, takes fewer risks.
11. FREE Coin machines! No more paying 9% for Coinstars ;) Which isn't *too* bad since it saves you hours of rolling 'em up like you're back in 1985, but still. FREE is better than $5 or $10, or if you're a pimp saver - $20 in fees!

And I'll tell you a secret - you can just walk in and use it! How awesome is that? It's not being sneaky either, at least at the one I went to. When I handed over my receipt to the teller she didn't even ask if I was a member. It's possible she was off her game, but even so what would they do - NOT give you back the money you just gave them? I don't think so...

Regardless, you should totally hit one up next time you're on the coin war path. You deserve to take home as much as you can after all those years of saving!

It took me 6 months to save my latest deposit of $76.48 (pic of coin breakdown), and all I did was empty my pockets when I got home every night. I fill up piggy banks, vases, jars, etc until I deem it worthy of 10 mins of my time. Then it's off to Coin Heaven we go! They get to go home and see all their friends, and I get more money for my Fun Fund. It's a win-win situation (not to be confused with Mike "The Situation" - that guy's interesting, but he sure doesn't save you any money ;)). So start hoarding those pennies folks!

Labels: banking, bargains, interest, money hacks, saving

Do you spend hours each week searching for the best interest rates around? Do you bounce from one bank to another, living on the thrill of that extra .01%? If so, you, my friend, are a rate chaser. And you also have a lot of time & patience ;)

Many PF Bloggers consider this on a daily basis, but personally, I just can't do it. The thought of opening & closing handfuls of bank accounts alone is enough to make me nauseous. All that paperwork & time to get it up and running, only to xfer out the money when a better rate pops up? Nah, not for this homeboy.

That's not to say it isn't financially smart though. Mathematically, it might totally make sense! If you can grab a higher interest rate or pay a lower % on debt, then more power to you! I support that 100%, hands down - especially if you have out of whack rates to begin with. Having the best rates is totally commendable, but it's the frequency of switching accounts (sometimes every 3 months) and the research involved that separates the rate chasers from the average joe like myself.

Not only do they need the best of the best, but they need it now. After all, it's just a matter of time until it changes again! Gotta bring in that extra dough while it's hot off the press, right? They also don't care if their accounts are scattered around town. If you're chasing rates, you won't always find the best ones at your favorite bank all the time (even at ING or Emigrant Direct, two of the usual favorites). This alone knocks me out of the running - I need everything possible under one roof, my bff USAA ;)

Then there's the actual cash reserves that come into play. If you've got thousands of dollars saved up (or in credit card debt) where the slightest move in rates can be the difference of earning hundreds of dollars to THOUSANDS of dollars, then yeah by all means get on that $hit! I'd do the same thing. As it stands, however, most of my our money (still not used to being married) are invested in our 401ks and Roth IRAs, with the remainder in a decent money market account which we tap every month. Without a huge cash reserve, it makes no sense for us to bounce around and follow the place w/ the higher rates - and I'm guessing the same goes for most of you reading this as well.

As you can see, it certainly takes the right type of personality (and bankroll) to play with the rate chasers. Financially, it certainly has its perks. But the real question at stake is if chasing rates actually makes SENSE for you? If it does, great. If not, then do your best and watch from the sidelines ;) More often than not, it doesn't pay to play.

Labels: banking, credit cards, interest

In fact, we actually paid $0.00 at closing! Looking back a year or so ago it didn't seem all that crazy, but with everything going on NOW it's like, "woahhh...did we actually DO that?"

Welp, we sure did, but we're def. happy with the results. At least as far as financing goes ;) I wish we would've waited another year to actually buy the place, but whatcha gonna do - that's life.

So why bring this all up now? Well, a) i haven't blogged about the whole story yet, and b) Chicky from Chicky Finance started asking me questions ;) And who am i to deny anyone such answers?

Here are some quick facts about the place:

• Townhouse w/ lake view, 3 finished levels, 2 bedrooms (the master is HUGE and could really be 2 bedrooms), 3 1/2 baths, 1700 sq. feet.

The crazy thing here is that we were initially looking to RENT! And a 1 bedroom apt. at that. It just so happened that we got lost on the way to check one of them out, and BAM - 4 days later we had a contract on the table and were on our way to being new home owners! Needless to say it was all pretty spur of the moment, but that's life right? You see something you want, and you go and get it....kinda like your wife or husband ;)

And here are some quick facts about our financing:

• Paid $360k ("bargained" down from $365k)
• Sellers gave us $10k to cover all closing costs & 6 mos of condo fees.
• 1st Mortgage (80%): $288k - 30 year fixed rate (6.875%), interest only.
• 2nd Mortgage (20%): $72k - 10 year variable rate (9% initially, but now "Prime - 0.45%" currently making it 3.55%), interest only HELOC (Home Equity Line of Credit) to avoid paying PMI.

I know people are gonna call us insane for some of this stuff, but ya gotta pick financing that best works with your situation. While we were able to afford a conventional loan (principal + interest payments), our main goal was to get our monthly payments as LOW as possible.

And the best way to do this? Pick up interest-only mortgages where we only pay the interest every month, *but have the option* to pay off principal anytime we wish w/ no fees or penalties (we're pretty good at that). As with everything else i talk about, this DEFINITELY isn't for everyone...

We then chose a 30 year fix for our first mortgage so that we didn't have to worry about crazy fluctuations out there. And then went the variable route w/ the HELOC hoping that it wouldn't get outta control - and lucky for us it's been dropping like crazy!!! Every time the Fed cuts the prime rate, our interest % goes down. It was initially set at 9% (Soooo high back then), but we refinanced to get Prime - 0.45%, now setting us at a measly 3.55%.

So that's the story about our residence and the financing behind it. I gotta say it was pretty fun putting this all together :) It still scares the $hit out of me owing so much, but i'm slowly getting used to it...

-------
- Here are some more mortgage posts.
- And here are some home ownership ones.

Labels: home ownership, interest, mortgages

Some of my friends know i'm into finance stuff, and some of them don't. But i have one friend that def. knows because she's alllllllways asking me stuff :) And it's totally cool because she usually asks me things that i don't know myself all the way - like the difference between an APY(Annual Percentage Yield) and an "interest rate" aka APR(Annual Percentage Rate).

I used to know it, but then i forgot cuz my brain is slow like that. So i googled it and refreshed my memory. Keep in mind my answers to her were skewed a bit because i know her financial history - she's 100% on top of stuff and never carries a credit card balance. Actually she just got her first c/c the other month to help boost her credit!

Here's a copy and paste of our IM convo., with our real screennames edited out (i don't have "J_Money" but i'm sure some lucky ba$tard does!):

(2:36:17 PM) Friend123: question... what is the difference between APY and Interest Rate. Look at the chart on this page, under: What you get.
(2:40:00 PM) J_Money: let me check :)
(2:40:06 PM) Friend123: thanks!
(2:41:40 PM) J_Money: "APR is the annual rate of interest without taking into account the compounding of interest within that year. Alternatively, APY does take into account the effects of intra-year compounding." - investopedia
(2:42:05 PM) J_Money: APY is when you have a balance every month that compounds
(2:42:15 PM) J_Money: and APR (the "interest rate") is the rate WITHOUT compounding :)
(2:42:26 PM) Friend123: so do you choose how you want it calculated?
(2:42:32 PM) Friend123: why do they list both?
(2:43:12 PM) J_Money: APY is always higher (both regards to savings accounts, as well as credit cards)
(2:43:29 PM) J_Money: so when looking at savings stuff - like cds, rates, bonds, etc, APY is the one you need to look at
(2:43:49 PM) J_Money: and when searching for credit cards, the APR is the one :) that is, if you dont' ever carry balances
(2:44:04 PM) Friend123: ahh ok
(2:44:09 PM) J_Money: you don't "choose" anything though.....they both will apply depending on the situation
(2:44:41 PM) J_Money: so w/ CDS and savings and stuff like that, unless you're only saving stuff for 1 month and that's it, APY is the one to look at cuz you'll have it on a monthly basis
(2:45:40 PM) Friend123: why do they show both?
(2:45:41 PM) J_Money: and w/ credit cards, it's the APR you're interested in since you never keep a balance :)
(2:45:55 PM) J_Money: cuz they both apply
(2:46:03 PM) Friend123: oh, i think i kinda get it
(2:46:10 PM) J_Money: i'll come over ;)

It might not be the clearest explanation ever, but i thought it was more interesting for you all to read about it via IM than the other boring ways. If you prefer these boring ways :), or just wanna learn more, check out the Investopedia's or the Motely Fool's explanations.

Labels: interest

I heart CNN like crazy, they are REALLY on top of their ish over there! I'm signed up to their "Breaking News" text alerts they've got going on, and i was alerted @ 7:22am this morning about this .50 key rate decrease!

If you're a news whore like me, all you have to do is text "alerts" to 26688 and sign up, it's totally free from them (you might have to pay for txt messaging if your plan doesn't cover it), and they usually come like once or twice a week....or even 6 these days ;) But i digress...

This new cut by the Fed affects a whoooooooole lotta things out there. And I don't know about you (although i'd like to!), but here are the ways that it impacts my own situation. And i'll give you a hint - i'm pretty happy about it.

What this means for my HELOC. This means total greatness! Since our Home Equity Line of Credit is tied to the Prime Rate (which will in turn go down the .50), our adjustable rate will also now slide. Holler! Currently @ 4.55%, it'll now be a crazy low rate of 4.05%!!! how crazy is that? And you know it's bad out there when my 2nd mortgage is a whole 3 points BELOW my 1st mortgage (6.875%)! haha... (Thank GOODNESS I didn't lock in our Heloc rate @ 7.72% back in June!)

What this means for my Credit Cards. This also means greatness! Most credit cards are based on the prime rate + or - some points, so as that goes down, so does the % charged! Anything can happen in today's market, but right now this means that i'll also see a hefty drop of .50% on any non-paid off credit card purchases, bringing my interest rate down to 4.5% now. Of course, i don't really have any c/c debt that isn't locked in at a great rate anyways, so this is really just potential greatness we're talking about here.

What this means for my savings. Not so good :( It's all about even stephen though, isn't it? luckily/unluckily i don't have much in our savings at this point anyways, so i wont' feel a hit on interest income there, but i DO have a nice pile in our Emergency Fund ($4k+) which is set in a money market account. I'm sure we'll start to see lower returns in there, but i have to admit i'd take the rate cut over this anyday! Selfishly speaking, that is ;) The economy going up would be best overall.

What this means for overall. Now's a helluva good time to find a great loan @ a great price! That, and the economy is getting scarier by the day...but you already knew that.

So what does all this mean TO YOU? Will this benefit your own financial gameplan? Everyone has their own way of workin' in out, so i'm always curious to see what everyone's up to out there. Anyone have even better rates? And if so, can i borrow some moeny ;)

Labels: crazy economy, credit cards, federal reserve, helocs, interest

The Mrs. and i have made a decision on our HELOC dilemma! We have decided to stick with option #1 - to continue going with the variable rate with no locks. Your comments definitely helped us put things in perspective, and we feel the odds are in our favor :) And with the other week's news about the Fed leaving the rates unchanged, i'm thinking we're on the right path.

The worst that can happen is it starts to go up over time, but even so history shows the prime rate hasn't gone above 10% in 25 years...and if disaster does strike, raising it above this threshold, we'd hopefully be long gone with the loan anyways, or at least re-financed by then.

And if we're all wrong? well.....let's just say i'll be concocting some pretty colorful posts! That is, after i wipe up all the tears from my keyboard.

Labels: helocs, interest, mortgages

*Update: We've decided to go w/ option #1 :)
*Update 2: Our HELOC is currently at 2.80%!

Similar to my car dilemna, now going on 4 months w/out a decision, it's enough to drive a person crazy.

Do you lock in a rate now and hope you caught it on the rise, or do you wait it out a bit and save more money each month?

The funny part is that Mrs. Budgetsaresexy and I JUST had our first talk about this last Saturday, and we told ourselves that we'd lock in the next time it goes up...thinking we'd have at least a couple months before thinking about it again. Ooops. So I now bring this dilemma to you guys for help :)

Here are the details on our current loan:

• This is our "2nd Mortgage"
• It's a maxed out Home Equity Line of Credit (HELOC)
• It's an interest-only loan
• The rate is variable
• The current rate is 4.55% (Prime - .45%)
• The current balance is $62,602.23.

So basically, our current rate is lower than ANY OF OUR OTHER LOANS. It beats out our 1st mortgage, our car loan, and all credit cards. Sexy, ain't it? Of course though, that's only how it works out today.

There's a load of variables to consider here, not to mention hefty pros and cons, and we def. want to stay with USAA for a number of reasons. Here are the 2 options we're considering

Option #1 - Keep the loan as-is. Rate at 4.55%

• This rate can change at any time, depending on the Fed.
• We have 172 months to pay back this loan...8 months have already passed ;)
• This means monthly payments of roughly $230.
• PRO: Since we budget for $540 here, we save $300 every month!!! (our original amount when we purchased last year was $540, before re-financing and the fed lowering rates)
• PRO: Our emergency fund and house savings account gets padded each month with this $300!
• CON: We have no control since it's variable - The rate is associated with the WSJ Prime Rate, so it's all in the hands of the Fed. And considering it's been cut heavily over the past 10 months, I'm starting to believe the hype that it will start going back up.
• CON (in theory): It's interest-only - we are only paying off interest each month, adding nothing to the principal. I say in theory because the average home owner will not add extra to pay off the principal. We usually pay portions off sporadically, rather than a set amount each month. Our initial HELOC was $72k, so we've knocked it down by $10k already, even though we have an interest-only loan. Granted, most of this $10k was on accident.

We've been with option #1 from day one of buying our house, making it even harder to switch out as we're so used to it. It's so freakin' nice having that $300 cushion to play with :) BUT, we also know that we'll eventually need to lock in a rate as the tides WILL turn...it's just a matter of when.

It also gets a bit tricky because the rate above moves with the WSJ Prime Rate plus or minus the lender's points, while the rate to lock it in moves with the 182 T-bill (3 year ones I believe) plus or minus the lender's points. So it's like you have to judge two different trends.

Option #2 - Lock in a rate now at 7.72%.

• The interest rate will stay exactly the same now, as it will in 10 years.
• The HELOC would essentially convert into a Home Equity Loan (read about the difference)
• The loan will ammortize over 180 months
• The monthly payment would be around $588 (i used this simple loan calculator)
• PRO: We would now be paying both interest, AND principal. The main portion of course going to interest, but it's now all built in and mandatory - similar to a normal loan.
• PRO: No more worrying/thinking about interest rates adjusting, as it won't matter here.
• CON: The monthly price tag drastically goes up! no more padding any of our accounts :(
• CON: We'd now need to re-budget for an extra $45 a month, which is quite different than having an extra $200 to play with!

This lock in rate changes every month with USAA, on the 3rd Tuesday of the each month, so we have a few weeks to decide. It's important to note though that over the past 3 months it's gone from a steady 6.75% (from as long as I can remember) to 7.18% last month, and now to 7.72% this month.

As i mentioned, we're eventually going to have to lock in a good rate before everything goes up, but is that time now? According to that graph up at the top, taken from BankRate.com, i'm thinking option #2 is looking like the best bet here. What would YOU do?

Labels: helocs, interest, mortgages

Wow... so now my HELOC will be down from 4.80% to 4.55% ... Can it get any crazier?
From MSNBC (can you tell i read this a lot?):

"The central bank is walking a tightrope, trying to jump-start economic growth while also confronting the risk that if it overdoes the credit easing it could make inflation worse down the road."

Labels: federal reserve, helocs, interest

MapGirl put out an interesting post yesterday about crazy interest rates these days, and it got me thinking. I, myself, have been coming across some pretty interesting things lately! Just take a look at our current interest rates:

• 1st Mortgage - fixed: 6.875%
• 2nd Mortgage (HELOC) - variable: 4.80%
• Credit Cards - variable: 5.25%

Can you believe that?! My credit card rates are LOWER than our 1st mortgage! haha...and it's not even by a little right now, it's by a whole point and a half. I get that our HELOC and c/c's are based on the prime rate, but my goodness it's pretty funny to look at.

Now, if i had the balls like some of you have, i'd take out a chunk of the credit card and throw it against our 1st mortgage! we'd save some pretty pennies for sure, but the whole thing scares me :) As soon as those rates start hiking back up, we'll have to knock away that credit card debt...and fast! We can't "lock in a rate" there like we can for our HELOC.

Speaking of which, although our $62k in our HELOC is variable right now, we always have the option of "locking in" a rate for a portion, or all, of the balance. While i don't think it's a good time right now, it's def. something for us to consider as the economy starts picking up. I'll be sure to keep you posted (pun intended).

In a perfect world though, we'd like to correct these #'s by refinancing our 1st mortgage. Bankrate is currently showing a national average of 5.79% for a 30 year fixed, which would save us a hefty $245 per month! BUT, there are a few hurdles we'd have to jump through:

1. We'd have to get it at "interest-only" - Currently this allows us to have a lower payment each month, while still giving us the ability to pay extra towards the principal. (It's not good for everyone, but for us it works.)
2. Our house would have to appraise within 10k of our purchase price - And since our HELOC was recently frozen :(, i'm gonna guess this is a long shot.
3. We'd have to pay closing costs and probably a point or so if i had to guess. - In the long run this would work to our benefit, but w/ Mrs. Budgetsaresexy soon to be in graduate school, we don't want to be shelling out much...esp if we might sell/rent out in the near future.

So, this leaves us back to square one :) But i'm not complaining! In fact, i hope the Prime keeps going lower to be honest. Selfishly, it effects us much more positively than does saving/bond/etc rates. On the other hand that would mean the economy isn't doing all that great....and that's plain scary!

Labels: credit cards, helocs, interest, mortgages

What a day for the consumer: The Fed cut rates by 3/4 a point, AND the Dow is up 400 pts!

(FOUR HUNDRED)

That's what i'm talking about :) This is huge for us as it'll drop our variable HELOC rate by .75%! Of course, this news isn't the best for those high-yield saving accts, but currently that doesn't apply to us.

A good 8 months ago we were paying 9% on our home equity line (our 2nd mortgage). But after all the fed cuts and refinancin' we did, it'll now be at an astonishing. 4.8%! Freakin' unbelievable. Of course, most of this is purely luck and timing, but hey i'll take that.

For those of you checking around for a decent loan or mortgage out there, i'd say it's not a bad time to pick one up these days ... And for all you investors out there. HOLLER!

Labels: federal reserve, helocs, interest, mortgages, stock market