Suze Orman Book Free on Oprah site

[desertgrandma]

Originally Posted by lilac_jive

Mine has no rewards, it sucks.

I jumped on the Amazon Visa in November. For every 2500 points, you get a $25 gift card.
Anything bought thru Amazon gets you three points per dollar.
Places like Starbucks, restaurants, etc get you 2 points per.
Big box stores get you 1point per.
The first 90 days, they triple your points.
Charged everything for Christmas, but realize that we pay it all off at end of each month. Most was bought thru Amazon.
Now I"m sitting here with $75 in gift cards, and trying to decide the best way to spend it.

Of course, now that Christmas, and the triple points part is over, it will take me way longer to get even one GC, but it was nice while it lasted!

[lilac_jive]

Originally Posted by pilotbob

What's in your wallet? Gee there are so many cards out there and they all want your business. If you paying off every month you really should have one that is good for that scenario. We use Citibank which gives straight cash back. Also, discover has a good cash back, and also they will have bonus cash back for various stuff. Like one money might be 5% on gas, another month 5% on entertainment stuff.

The only funky thing about Citibank is they limit the card to $300 cash back per year. But, we just got a second account so when one cash back is maxed for the year we use the other. Stupid that they let us do this, why not just not limit cash back.

BOb

HINT: Sign up for mint.com its totally free.... once you have your accounts in there they will suggest areas you can save. Credit cards are the most popular savings they list.

I had this one in college and it did the trick, but I can't switch right now since I am applying for a mortgage. Once that's over, I'm dropping that card so fast Citi's heads will spin (it's a citi card).

I stay away from online account trackers, I do all of my finances on a spreadsheet. I feel more in control that way (makes me keep track off all purchases).

[Sparrow]

Originally Posted by pilotbob

...am paying double house payments (doubling principle) amount each month. I can't wait for my mortgage burning... I hope it's before I am 50.

I've had a hard time convincing other people to agree with me (so maybe I'm wrong ) but I think, for people planning to pay off their mortgage early, it's a good idea to consider getting a mortgage spanning the longest time possible.
A lot of people find the idea of a shorter-term mortgage appealing, but if you're planning early payment anyway it may not be the best option. A 30-year mortgage will have lower monthly repayments than a 20-year one - this repayment differential can be used to reduce the principle owed.
The more money going to pay off the principle, rather than interest, the more efficient the mortgage repayment strategy imho.

[koland]

Originally Posted by pilotbob

It's no wonder our country is in a recession. This get it on credit attitude is a problem.

I currently carry no credit card debt, have no car loans and am paying double house payments (doubling principle) amount each month. I can't wait for my mortgage burning... I hope it's before I am 50....


The only savings you should be doing while in debt (in my opinion) is to maximize 401K match. That is usually the best ROI you will every get.... unless you are a stock market guru.

One of the main assumptions of a retirement that only takes 70% to 80% of your previous living costs is that you then no longer have a mortgage (or other debt; all college costs of you and kids are paid off). And in that assumption is that the mortgage only cost, at most, 30% of your previous net wages (in other words, was a low rate and no more than double your annual salary, 30 years ago when you took it out).

Now, people take out 30 (and 60, recently) year mortgages in their 60's and beyond. Many who were "caught" in the mortgage crisis took out interest only loans or negative amortization loans (the loan got bigger every month, as the payments were too small) with adjustable rates, counting on refinancing every year or two as the value of the house went up (my favorite was the 85 year old on fixed income that had one of each - then was upset when he couldn't afford the new payments and lost the house, blaming the bank). And loans for 50% to 100% of their take home pay. The examples of the outrageous loans are always in the news, perhaps because these are the kind of loans that are all in default (the super-risky loans that banks used to have a reputation of not issuing).

We paid off the house several years ago (sure, there isn't a tax writeoff, but it wasn't worth much - after you subtract out your standard deduction and then adjust to your tax rate, you might get a tiny bit off you taxes, but you still paid tens of thousands in interest that could have been in your pocket). It helped to build one we could afford (and it's no super-tiny model, just modest). Like you, cards are paid off and only used for business or personal purchases that can be paid off the next cycle (then the rewards points used as a discount for other things we would have done anyway).

The 401K match is the best ROI (and now you are buying at 1998 prices, which is a bargain); sadly many companies have cut those off this year. As a result, a Roth IRA is a much better idea for the first part of your money, if you are not getting a match. Only the amount you can save over that should go into the 401K. And since you aren't getting a match, it's actually best to pay off credit cards than make any retirement contribution, if you don't get a match.

[koland]

Originally Posted by Sparrow

I've had a hard time convincing other people to agree with me (so maybe I'm wrong ) but I think, for people planning to pay off their mortgage early, it's a good idea to consider getting a mortgage spanning the longest time possible.
A lot of people find the idea of a shorter-term mortgage appealing, but if you're planning early payment anyway it may not be the best option. A 30-year mortgage will have lower monthly repayments than a 20-year one - this repayment differential can be used to reduce the principle owed.
The more money going to pay off the principle, rather than interest, the more efficient the mortgage repayment strategy imho.

The reason it works is the lower interest rate, not the time period. Longer term mortgages almost always have a lower rate than the shorter term ones. And if something happens (like a job loss or disability), the lower payment might be needed. Of course, many people went for the longer term mortgages in order to qualify for larger and larger loans they could barely pay for, falling for the "payment you can afford" spiel that used to be confined to car lots (especially used car lots) and not mortgage lending.

There are exceptions - we had a 10 year loan on our last house, as it had both the lowest rate (by far, that was a few years back and rates were nowhere near as low as now) and the lowest fees, as the credit union could keep the loan entirely in house for that time period and only had to go to an outside mortgage lender for longer term loans. It worked well for us and we sold the house a few years later when a neighbor noticed us packing up and starting to do cleaning, never even listing it and for the first number that popped into my head. I've missed it and wished we'd kept it as a weekend place (but that would have meant a loan on this house), up until a couple of weeks ago - from the upper part of the property, you can see the Kingston Steam Plant where the big ash spill happened in TN (it only affects the view there; we were on a second river, so no affect on the water and despite the complaints of those filing lawsuits, the ash has always drifted via the wind some onto properties nearby).

[pilotbob]

Originally Posted by Sparrow

A lot of people find the idea of a shorter-term mortgage appealing, but if you're planning early payment anyway it may not be the best option. A 30-year mortgage will have lower monthly repayments than a 20-year one - this repayment differential can be used to reduce the principle owed.
The more money going to pay off the principle, rather than interest, the more efficient the mortgage repayment strategy imho.

This is probably true. But, most people don't have the discipline to make a 15/20 year amortization payment on a 30 year mortgage. The average American (at least) seems to think when they buy stuff, not how much is it but how much a month is it. This is why we see ridiculous thing like 4-6 year car loans. Most people buy more car than they really should.

Originally Posted by koland

The reason it works is the lower interest rate, not the time period. Longer term mortgages almost always have a lower rate than the shorter term ones.

Really, I thought it was the opposite. But, I haven't shopped mortgages much lately.

When we got our first mortgage on our current house we went 30year fixed. After about two years mortgage rates went down quite a bit I think we refied for about 2.5% or so lower. We went to 15year fixed with basically the same payment as before. This cut around $50k or so off the interest if we went with the normal 15year amortization.

So, even if the rate is .5% or so higher for the shorter loan... I you plan to make the scheduled payment a shorter term will save you ALOT of money.

As far as the "tax deduction" loss. This is just a misnomer perpertuated by the mortgage industry. You get about 30% back of your interest payments off your taxes. But, remember, paying interest is like GIVING the bank money.

If anyone wants to send me AS MUCH of your money as you want. For every $ you send me I PROMISE to send you 30¢ back on April 15th of the next year. Hmm... doesn't sound like such a nice deal any more does it???

BOb

[tech_au]

After reading this and a few other Money books over the last few years it seems to come down to a few major points.

If you can't pay your credit card off in full at the end of the month don't put it on there at all

Start a regular savings plan to use for emergencies.

Live within your means not above it.

Why do you think that so many people(not just in the US but around the world) have so much difficulty following these (what I think are) simple points ?

[pilotbob]

Originally Posted by tech_au

Why do you think that so many people(not just in the US but around the world) have so much difficulty following these (what I think are) simple points ?

Is that rhetorical? Or, did you want an answer?

BOb

[koland]

Originally Posted by pilotbob

As far as the "tax deduction" loss. This is just a misnomer perpertuated by the mortgage industry. You get about 30% back of your interest payments off your taxes. But, remember, paying interest is like GIVING the bank money.

If anyone wants to send me AS MUCH of your money as you want. For every $ you send me I PROMISE to send you 30¢ back on April 15th of the next year. Hmm... doesn't sound like such a nice deal any more does it???

It's actually worse than that. Let's say you pay $30K in interest for the year. First, you subtract the standard deduction of about $10 (since most people don't really have any other deductions that get them close to that). Now you only have $20K to deduct. Even at the highest rate of 28%, you only get that "back" on the 20K, not the entire amount. For this particular person, it's 18% back (and that's with both a high interest amount and an assumption that all the deduction is in the highest tax bracket). In the meantime, the govt charges the business taxes on the entire amount (the states pretty much look at gross income, although fed taxes are more on "net"). Those in states with income taxes may get to deduct it there, but not all do (and not all states have an income tax). The deduction can be a bonus for some, but should never enter into your calculations on whether a loan is a good deal or whether or not you can afford it. You especially should not depend on getting that "return." Look at CA - they have suspended income tax return checks for the time being. There is no guarantee the deduction will remain in the future, as well.

[lilac_jive]

Originally Posted by tech_au

After reading this and a few other Money books over the last few years it seems to come down to a few major points.

If you can't pay your credit card off in full at the end of the month don't put it on there at all

Start a regular savings plan to use for emergencies.

Live within your means not above it.

Why do you think that so many people(not just in the US but around the world) have so much difficulty following these (what I think are) simple points ?

All I can say is "word."