My wife and I bought a 2010 Subaru Forester brand new in September 2010. I bought an extended warranty, bumper to bumper for 7 years or 70k miles. Since this is our second car and my wife uses the bus or we car pool together it was not going to see a ton of miles so this made a great deal of sense. The car has just over 20k on it now and it is a little over 2 years old. So far the car has been very cheap to maintain, insure and has, in general, been hassle free. We are paying on it monthly and should be finished with it in about twenty four months.
Our other car, a 2000 BMW 3-series, I bought with cash and never had a payment on it. I would say it was reasonable to insure but it needed consistant maintanence. With my wife's job changing location so that we could commute together I took a closer look at our necessity for two vehicles in the next year. At the end of October I decided to sell the BMW. After looking at all the numbers I realized I was forking out, on average, $475 a month for a car that I didn't have a loan on. I was a little astounded it was that high. That amount of money made the decision very easy.
I don't plan on being without a second car for too long. I would like to get a second one before summer but I am really enjoying the added savings that we found in the time being.
How much is your car costing you? Is it worth it?
PNC Park (Let's Go Bucs!)
Saturday, December 29, 2012
Tuesday, August 14, 2012
Shaping Up
We finally closed on our home again, for the third time! This refinance took a tediously long two and a half months. I was able to take advantage of our equity as I had previously explained and was able to bring our student loans that exceeded 6% under our home loan. The new loan is a 5 year HEL at an interest rate of 1.99%.
To further improve our educational loan conundrum, my wife qualified for a $5000 federal loan forgiveness for teaching in economically disadvantaged urban schools for the last five years.
The only student loan that we still have in play is mine (now just under $6k) at an interest rate of 2.875%.
I will give the new home loan two months and the debts that were paid off that same time to register with the credit agencies before I go ahead with our auto refinance.
Just a short update today.
To further improve our educational loan conundrum, my wife qualified for a $5000 federal loan forgiveness for teaching in economically disadvantaged urban schools for the last five years.
The only student loan that we still have in play is mine (now just under $6k) at an interest rate of 2.875%.
I will give the new home loan two months and the debts that were paid off that same time to register with the credit agencies before I go ahead with our auto refinance.
Just a short update today.
Wednesday, May 30, 2012
Moving and Shaking!
A couple developements have happened since my last post and I will share some details.
Secoundly, I fully funded a Roth IRA through Scottrade for 2012 and made my first purchases of dividend yielding stocks. In addition to my contribution to the TSP my wife and I will utilize Roth IRA's to invest in dividend stocks and diversify our holdings ourselves. We will also use those accounts to help unrealize as much income as we can to avoid unnecessary taxation. I will create a section for our holdings so that you can follow along.
In the very near future (probably next month). I am going to refinance our car loan to take advantage of a lower interest rate and an additional loan consolidation. I will post details of that as they become available.
First off, in a previous post I mentioned about consolidating my student loans if I had that opportunity. It looks like that will happen. My current Home Equity Loan is at 3.99% fixed but I am in the process of obtaining a new Home Equity Loan at 1.99% and tapping some spare equity to encompass my student loans into the frey. This will actually decrease my total monthly payments by about $320.00 and the house will still be paid off in the same amount of time. The total savings of this change will be around $13K over forty two months. This takes into account my interest savings and the monthly savings I will have on the loan. Very exciting!
Secoundly, I fully funded a Roth IRA through Scottrade for 2012 and made my first purchases of dividend yielding stocks. In addition to my contribution to the TSP my wife and I will utilize Roth IRA's to invest in dividend stocks and diversify our holdings ourselves. We will also use those accounts to help unrealize as much income as we can to avoid unnecessary taxation. I will create a section for our holdings so that you can follow along.
In the very near future (probably next month). I am going to refinance our car loan to take advantage of a lower interest rate and an additional loan consolidation. I will post details of that as they become available.
Monday, February 13, 2012
Home Ownership
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| Our First Home |
Home ownership is something that we take for granted in this country. When I lived in Argentina the interest rates on mortgages was around 24% for 10 years fixed or 12-14% for 2yrs and variable after that, with a substantial down payment required. Obviously in the United States, borrowing money is very cheap and accessible to people in almost all financial situations with an income. When my wife and I bought our first home in 2008 we put down 20% on our $84000 fixer upper. Because of my wife's credit we had to base our loan from my income, this was not a problem securing the loan. After the housing collapse and the mortgage rate decline I looked to refinance. We initially started with an interest rate of 6.125%. We had a P&I payment of $409/Month, I added $141 to that payment and split them into biweekly payments to maximize my interest savings. Even with biweekly payments and the increase over principal we were looking at paying more for our home in interest than the initial purchase price. As our AGI increased I looked into shortening our term and overpaying our mortgage by a lot.
In December 2010 (two years after purchasing our home), I found a local credit union willing to be creative with our balances. They refinanced our home, a very small home equity loan, and two outstanding credit card bills to a 5year home equity loan at a fixed rate of 3.99%. We just finished our first year of repayment December 2011. Therefore we were able to change from an expected payoff of around 18 more years from now and about $90k in total interest to 3.5 more years of payments and $13k of total interest.
That sounds to me like a $77k savings as well as 172 months of having my mortgage allocation in my pocket instead of heading out the door. 172 months at my original payment of $550 is a whopping $95k, my extra payment of $950 for 44 more months is only $42k, that is a savings of $53K.
I can understand the choice to pay your mortgage down by just over minimum payments and investing the extra that you could put towards it but I would rather be 33 years old and have 100% equity in my house and only a roof over my head instead of a mortgage.
TOTAL SAVINGS IN HOMEOWNER COST = $130,000
Lessons Learned
Sometimes we learn very important lessons when we do something right. Most of the time, we learn difficult lessons when we do something wrong.
Right after we got married we got involved in a vacation club. Unfortunately this club has not suited our vacation needs at all. It is not a bad program, just not for us. We should have been married longer before we decided on something like this. With a smallish upfront cost $3250 we thought it was a nice opportunity but five years later we have used it once and owe an annual maintenance fee of $325. We really hurt ourselves with this program and I would consider it one of my largest financial regrets. This program can not be given back and so far we have been unable to sell it even at a very steep discount.
The lesson to learn is: Do not make a hasty decision in front of a salesman. If they don't give you time to make up your mind then you don't want it. (I had to learn this lesson now two times to truly believe it.)
Right after we got married we got involved in a vacation club. Unfortunately this club has not suited our vacation needs at all. It is not a bad program, just not for us. We should have been married longer before we decided on something like this. With a smallish upfront cost $3250 we thought it was a nice opportunity but five years later we have used it once and owe an annual maintenance fee of $325. We really hurt ourselves with this program and I would consider it one of my largest financial regrets. This program can not be given back and so far we have been unable to sell it even at a very steep discount.
The lesson to learn is: Do not make a hasty decision in front of a salesman. If they don't give you time to make up your mind then you don't want it. (I had to learn this lesson now two times to truly believe it.)
Old vs New
This is a conundrum faced by today's young adults that our parents and their parents did not face. Today the average college grad starts their professional life with just over $25k in student loan debt. My parents both graduated from private universities, my father from Syracuse and my mother from Villanova. They graduated with a cumulative debt load of $4500. Today's youth are not only facing the extreme escalation of education costs and the ridiculous interest rates associated with them, but they are also faced with credit card debts, living expenses and other liabilities that their parents may not have experienced.
My wife and I both worked while we were in college and were able to make some headway on paying off our loans before leaving school, or not accumulating a loan in the first place. Our Student loans currently look like this:
Loans include both undergraduate bachelors degrees and my wife's masters degree.
Me:
Original Principle Interest Rate Currently Owe
$5,147.84 @ 6.250% $0.00
$8,430.23 @ 2.875% $4,746.14
$3,386.56 @ 2.875% $1,630.39
Her:
$9,431.89 @ 6.250% $4,016.42
$5,288.00 @ 6.800% $3,449.02
$7,475.00 @ 6.800% $5,394.51
$4,533.64 @ 6.800% $3,881.75 (masters loan)
$6,153.94 @ 6.800% $5,203.58 (masters loan)
Totals:
$49,847.10 $28,321.81
We currently pay $625.00 monthly towards these loans biased to the highest interest rates.
Meanwhile my wife grew up in an economically disadvantaged family and she amounted many revolving debts that were unpaid and in collection. Those debts were around $4k and since my student loans were the only debts I had, I used my very good credit to absorb her outstanding debts to clear her collections and allow her to build a new credit history. Most of our parents did not face the extra burdens that the credit industry has been able to create for the youth of this country. Don't get me wrong, I am a firm believer in the power of responsible credit use. I have been a credit card holder since I was sixteen and I have made a substantial amount of money on cash back offered by the credit companies.
I merely want to point out that EASY credit, managed irresponsibly, can debilitate long term goals very rapidly.
I am currently satisfied with the repayment status of these loans. For 2012 I will not be changing the payout for them. I would consider an opportunity to consolidate the loans in the 6% range but so far I have not found that opportunity. Ideas are welcome?
My wife and I both worked while we were in college and were able to make some headway on paying off our loans before leaving school, or not accumulating a loan in the first place. Our Student loans currently look like this:
Loans include both undergraduate bachelors degrees and my wife's masters degree.
Me:
Original Principle Interest Rate Currently Owe
$5,147.84 @ 6.250% $0.00
$8,430.23 @ 2.875% $4,746.14
$3,386.56 @ 2.875% $1,630.39
Her:
$9,431.89 @ 6.250% $4,016.42
$5,288.00 @ 6.800% $3,449.02
$7,475.00 @ 6.800% $5,394.51
$4,533.64 @ 6.800% $3,881.75 (masters loan)
$6,153.94 @ 6.800% $5,203.58 (masters loan)
Totals:
$49,847.10 $28,321.81
We currently pay $625.00 monthly towards these loans biased to the highest interest rates.
Meanwhile my wife grew up in an economically disadvantaged family and she amounted many revolving debts that were unpaid and in collection. Those debts were around $4k and since my student loans were the only debts I had, I used my very good credit to absorb her outstanding debts to clear her collections and allow her to build a new credit history. Most of our parents did not face the extra burdens that the credit industry has been able to create for the youth of this country. Don't get me wrong, I am a firm believer in the power of responsible credit use. I have been a credit card holder since I was sixteen and I have made a substantial amount of money on cash back offered by the credit companies.
I merely want to point out that EASY credit, managed irresponsibly, can debilitate long term goals very rapidly.
I am currently satisfied with the repayment status of these loans. For 2012 I will not be changing the payout for them. I would consider an opportunity to consolidate the loans in the 6% range but so far I have not found that opportunity. Ideas are welcome?
Potential
There is a lot of potential to be found as a young investor. I have so far spent the first six years of my professional life capturing as much earnings potential from my career set as I can. My wife and I have together changed jobs (not careers) eight times to attempt to reach the highest earnings potential that we can in our respective fields. My wife is a teacher by the way. She has her Masters Degree and is a Reading Specialist. I will get into her retirement contribution in the future.
In 2006 I graduated from college and started planning for my retirement. Maximizing your employment situation can be the quickest way to accumulate capital for a young adult. Since 2006 our combined AGI has increased steadily. Also considering side benefits of better/cheaper health insurance, pensions and retirement matching. Your take home is not the only thing you should consider when job hunting.
AGI's Since 2006: % Change
2006: $33,514.00 -------------
2007: $66,593.00 198.7%
2008: $70,048.00 5.19%
2009: $73,263.00 4.59%
2010: $91,281.00 24.59%
2011: TBD Roughly $105,000.00
The opportunity to generate a larger income annually is something that can not be taken lightly. When you are considering retirement early and want to gain financial independence you may have to take a less attractive job to increase the bottom line. I believe that for the time being (the next 2-3 years) our household income should see a 3-4% increase in AGI annually.
In 2006 I graduated from college and started planning for my retirement. Maximizing your employment situation can be the quickest way to accumulate capital for a young adult. Since 2006 our combined AGI has increased steadily. Also considering side benefits of better/cheaper health insurance, pensions and retirement matching. Your take home is not the only thing you should consider when job hunting.
AGI's Since 2006: % Change
2006: $33,514.00 -------------
2007: $66,593.00 198.7%
2008: $70,048.00 5.19%
2009: $73,263.00 4.59%
2010: $91,281.00 24.59%
2011: TBD Roughly $105,000.00
The opportunity to generate a larger income annually is something that can not be taken lightly. When you are considering retirement early and want to gain financial independence you may have to take a less attractive job to increase the bottom line. I believe that for the time being (the next 2-3 years) our household income should see a 3-4% increase in AGI annually.
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