Here in Madrid motorcycles are becoming quite common since our mayor changed the parking policy. motorcycles can park free in the street. But you can't park your car in the street for long times so if you want to go to work by car you will need to park it in the outskirts and use public transport
Anyway, you need to give them public transport next to a parking area.
To remove as many paper products and chemicals from my home as possible. So far we've been 2 months without paper-towels, and it's EASY. And I've convinced my father to do the same thing :)
Yes, I'm sure motorcycles, scooters, and mopeds will all be part of people's efforts to burn less fuel, both for the money saving and for putting less carbon into the air.
I, too, live in a Seattle apartment. I just moved here from out of state - is there any way to compost food via the city's yard-waste pickup if you don't happen to have an accommodating neighbor? We have a small apartment, with no yard (and hence no need for compost), and are surrounded by apartment buildings.
Excellent overview! Thanks for the quick synopsis. I too researched the programs available and felt that you must weigh the pros and cons of the expense. Clearly with the high cost programs I felt that I 'd rather put that money as my first mortgage injection. The cost with some programs are out of reach to some consumers. The companies that offer a good service at a reasonable cost will prevail. The company I mentioned on post #24 has a promotional offer that is a fraction of the cost of other programs. I wish everyone luck on their desire to take personal responsibility for one's finances. And Julie thank you for the open discussion on your blog. Let's educate not bash. Thanks.
You totally took the words right out of my mouth. Last year my son got an activity toy from Target for Christmas. Right about the time he grew tired of it, and it ended up at the bottom of the toy box, Target issued a recall. They are awesome about recalls because they usually offer a gift card for the amount of the toy at it's highest shelf value. So returning the toy that I bought on clearance for $6, got me a $15 Target GC. Which means newer, pricier toys for FREE! (I didn't have a receipt, and had lost most of the accessories that went with it, but they took it back no questions asked!)
And the recall was over something that really wasn't all that serious, so I wasn't freaked at all.
I've been diluting all kinds of liquids without any problems--shampoo, conditioner, cleansers, liquid soap, etc.--it makes everything last so much longer so you'll need to buy less.
More cloth bags--I'm getting pretty good at remembering.
No water bottles!
I'm not turning on the heat until we reach freezing temps!
I just found out last night that you can take your batteries to a Batteries Plus store for recycling, if you have one nearby.
I wasn't able to find any resources on recycling batteries where I live, but we have a Batteries Plus in town and I checked their website and they do claim to recycle batteries.
1) Start recycling all recyclable items in my house
2) Stop using paper products
3) Carpool to work with my husband
4) Stop shopping at Wal-Mart and be a more socially and environmentally conscious shopper.
Your post has inspired me to try riding a bike to work. I've a question, though -- has there been much thought given to the impact fuel efficient motorcycles might have on the environment? Might be a good compromise between cars and bicycles.
I wrote about this topic in Is Infrastructure Destiny?. My priority short-term is to use less energy; long-term is to live in an affordable neighborhood where I can walk safely to an affordable grocery store as well as to the library, restaurants, etc. As our population ages, this arrangement can be both planet-saving and allow people to live independently longer.
I started bulk buying again after we moved last year. We bought a chest freezer and the area under the stairs made a great pantry. If your looking for storage jars, the big two gallon glass pickle jars work great. We ended up with a few by buying pickles and I got more by asking people I knew that did events where they served food. I also got some through Freecycle by from someone that saved the empties from church functions.
Popcorn was probably the biggest money saver. We bought an air popper and a huge bag of bulk corn. I have to admit the stupidest one was a bulk jug of yellow mustard. That stuff is cheap and now I have this huge jug taking up fridge space.
The other thing we do is buy multiples when on sale. We do this with shampoo and other non food items like laundry soap. They go on sale periodically so we buy as many as I can easily afford and store them. It also helps to be a creature of habit, we use the same soaps, shampoo, toilet paper, laundry soap and cleaners.
The best way we have found to get thru cold Syracuse NY winters is to use microwaveable corn bags (cloth bags filled with feed corn) for the kidlets to hold when going into chilly beds. Their beds have flannel sheets and many layers of quilts, but still the corn bags help them warm up the bed faster. Plus, the kids still like footed pajamas best to keep warm.
We adults at my house go to bed earlier in the winter months and watch tv in bed. We have a heated mattress pad with dual control (her side is warm, my side goes up to inferno) to keep warm in the evening hours. We turn the mattress pads off when we curl over to sleep. We find our heat can be kept at 62 during the night if we do these things.
Just subscribed to this thread yesterday and today I get a picture of The Blue Block. We have this very same Blue Block Now with Excessive Levels of Lead. I looked it up and it has been recalled. Thanks Wise Bread!
Real story or not, I think we are all missing the point here. Most of us in the middle class will never count ourselves as rich (at least monetarily) because of the way we think about money. As long as we continue to buy depreciating assets (new furniture from the bigbox store, cars, run of the mill wall art and such) and don't bother to use OPM (other people's money), ie leverage, we will continue to wallow in mediocrity! Start thinking outside the box, and you'll go far!
I've always wanted to compost my organic waste but I've never been sure how to. Just the other day while I was cooking dinner I went to take out the garbage thinking about how much could actually be composted instead.
While it is true that you can get into trouble borrowing stupidly with payday loans, I have used them on just a few occasions to avoid overdraft fees with my bank ($34 each item!) and once to cover rent but I alway paid them off and only used the service when I had no other options. But I think all of the politicians that want to legislate these payday loan stores out of business are missing a serious point. Part of living in a free country is that we are free to make our own choices good or bad. When we start trying to legislate behavior I think we are starting down a slippery slope. I don't always agree with the things some people say but I believe in free speach and their right to say it. I wouldn't suggest legislation to keep them from saying something I don't like. Free people are free to make their own choices for better or worse. Better to educate than legislate!
I've been researching on using HELOC to accelerate the mortgage pay off and I think I can give a good example of how this technique will work.
Disclaimer: I'm not in the mortgage business nor am I an investment advisor so please don't take my words at face value. In other words, I may be misstating something about how loans work as well.
First off, the UFF site does say (in their FAQ) that this method ONLY works for people who have discretionary income each month. If you don't have any, then it will not work. But if you don't have any to begin with, then surely you cannot implement Julie's method either, as it requires putting in EXTRA monthly payments towards the principal.
To understand why MMA or similar products work, you need to recognize that a fix-rate mortgage is a close-ended, compound-interest type loan and a HELOC is an open-ended, simple-interest type loan.
If you look at your mortgage table that Julie created in her Excel spreadsheet (a big thanks there Julie), you will see that most of your payment goes toward the interest. This is why it is a close-ended loan...because you are paying the money back on a pre-calculated schedule. Whereas with a HELOC, you pay interest only on the outstanding balance for each day, you are not following some pre-established payment schedule.
Now, lets look at an example. Assume a 200K loan, at 6% fixed rate amortize over 30 yrs. Based on Julie's spreadsheet, the total interest paid at the end of 30 yrs is $231,676.56.
For simplicity, assume we also opened up a HELOC at the same time that we established this mortgage. So along with the first payment for the mortgage, we take out $5000 from the HELOC and pay it towards the principal of the mortgage. According to the spreadsheet, we now see that the total interest paid is $206,713.31. An immediate saving of $24,963.25 in interest cost for our $5000.
How much is the interest on that $5000? Well, lets be conservative and simple and make it 10%. $5000 x 0.1 = $500. That $5000 will cost you $500 for the year, or $500/12 = $41.67/month!!!!
Let us assume you have only $500 discretionary income per month. As you can see, in this simplistic case, it will take you about 11 months to pay off the $5000 in your HELOC. $41.67/month x 11 months = $458. So it costs you $458 in interest to use that $5000 from your HELOC to save you $24,963.25 in interest in your mortgage!! WOW!
How we can cut the cost of the interest from the HELOC even more? By using it like a checking account and by using your credit card to make most of your purchases if not all. When you get your paycheck, simply move all that money into the HELOC. What this will do is it will reduce the balance on the HELOC, hence, reducing the interest you have to pay. And by using your credit card to pay for your living expenses, you delay the withdrawal of that money from the HELOC. The longer that money stays in the HELOC, the more you save in interest cost.
So at the end of the month, you transfer some money out of the HELOC to your checking account and write a check to your credit card company to pay off the charges that you have incurred during the month. Keep in mind we assumed to have an extra $500/month discretionary income. Thus, you can now see that at the end of the month, your $5000 HELOC balance will now be reduced to $4500 + the interest for that month.
Lets say you get pay net $3000/month on a bi-monthly basis in the middle and the end of the month. On the 15th, you trasnfer $1500 from you checking to your HELOC account. On the 26th, you transfer $2500 from the HELOC account back to your checking account to pay your credit card company. On the 31st, you get another deposit of $1500 from your employer and you then transfer that into the HELOC.
This is what your HELOC balance will look like:
$5000 (from day 1 to day 14, this balance is used for interest calculation)
$3500 (from day 15 to day 26, this balance is used for interest calculation)
$6000 (from day 27 to day 30, this balance is used for interest calculation)
$4500 (on day 31, this balance is used for interest calculation)
As you can see, the interest is now less than the $41.67/month as your balance did not remain constantly $5000 through out the month. And within 10-11 months, this balance will be paid off and you are ready to begin another $5000 round.
I hope from the discussion above, you can see the effectiveness of using a HELOC to pay down your mortgage faster. But you can also use this approach to pay off any debt you have, not just a mortgage. And as you can see, our HELOC, even though it is pegged at 10% interest, still yielded much less net interest cost than the mortgage interest cost!
Furthermore, you can see that you need extra discretionary income each month to make this work. But the huge benefit is, you can always withdraw the money if you need it (thanks to the HELOC). Whereas if you pay extra towards your mortgage without having a HELOC, you lose access to your equity! Obviously, the more discretionary income you have the quicker you will pay off that $5000 balance and the quicker you can restart the next $5000 round.
Someone had mentioned in a previous post that you need to consider the cost of opening a HELOC. Well, find one that has no cost. Or just roll the cost into the HELOC balance and you can see it still saves you more money. Bank of America offers HELOC at no cost!
Now imagine this scenario: You have been paying an extra $500 per month towards the mortgage without using the HELOC method for 5 years. You are feeling pretty proud of yourself for such discipline. Then you get laid off and can't find a job for a year. Will you be able to cope? Assume your emergency fund runs out before you land another job. Can you still cope now?
You won't be able to draw on your equity because you failed to open up a HELOC. What's worse, you WON'T be able to establish a HELOC now because no bank in their right mind would give you one when you have NO INCOME!!! Now you can see how beneficial the HELOC method is!
Summary:
1. HELOC are open-ended, simple interest loans. Converting money tied in close-ended, compound interest loans to HELOC is the key to dramatic savings in interest cost.
2. Save tens of thousands (if not hundreds of thousands) of dollars in interest cost.
3. Own your home completely in 1/3 to 1/2 the normal 30 yrs span without changes to your normal spending habits.
4. Instant access to your equity at any time.
5. Just because a HELOC interest rate is higher than your mortgage rate doesn't mean you end up paying more interest. You have to analyze your net interest payments for each loan.
One last topic:
Now that you understand how this concept works (I hope you do :-)), should you fork out $3500, or $1999 or even $1250 for a software program to do this for you?
Well, the software will definitely help you "monitor" the progress for your mortgage pay down. It will also do any recalculation necessary in case you are not consistent in getting that discretionary $500/month. But it also maximize the use of the HELOC to help pay down the mortgage in the quickest time (at least that's their claims).
UFF supposedly hired Ph.Ds in mathematics to design their algorithms. And they also invited several math professors to try to beat their software.
I have yet to purchase any software myself as I would like to find out which is the better value.
I smell BULL. I work TWO jobs. I pay NO RENT. I live in a somewhat rural suburb, and there is NO WAY I could live without a car (trust me, I've tried) There's that funny Winter thing around here, so don't bother telling me to walk to work.
I have to pay for my car, I have to pay for insurance, and daily living. You need to figure in other costs as well: time costs being a large part of that, since my fiance works full time, and is a student full time, she's sure not staying home and cooking every night. So shopping can't always be done in bulk, and you can't REALLY live off of Ramen every day either.
If you work full time (40 hours) at minimum wage...you'd made $286.00 a week. good luck with that family of four. Good luck with a family of two for that matter, let alone covering insurance, clothes, rent...not happening.
I agree that there is a big dilemma regarding taking discretionary income to prepay or invest. Clearly, that decision is based on ROI(return on investment) if you can make more on your investments then it may be the better choice. You must take in to consideration the capital gains and liquidity on the investment. My personal challenge is how much more comfortable will I feel if I own my home outright? Clearly, it would give me a sense of financial freedom, I then can invest my full mortgage amount and accelerate my investment portfolio. It's clearly about personal comfort levels and choices. There are many opinions and "gurus" that would argue for and against all choices. One just needs to take personal financial responsibility and makes choices to secure one's financial goals. It's just like being healthy; everyone knows about it, there are different types of excercises ie. gym, bicycle riding, eating right etc. But you see many in our society that just don't or can't unless they have a plan. I've found a great analogy between buying and owning your home: Would you like to buy your home for $250,000 or own it for $660,000? Clearly the bank wants you to own it for $660,000. My goal: I'd rather own it for as close to the purchase price as I can, that's the key to mortgage acceleration. We Just must do something!! It's not about how much money one has, it's about how one manages the money they have. It's been great taking part in this discussion.
Anton, while I highly doubt the story is true, remember that just because there are multiple versions of a story out there, does not mean that there isn't a real version. Good stories get told over and over again, and details can get tweaked along the way.
And I had a rich great uncle who would have tried this, had he not been too cheap to buy a car worthy of being used as collateral.
Here in Madrid motorcycles are becoming quite common since our mayor changed the parking policy. motorcycles can park free in the street. But you can't park your car in the street for long times so if you want to go to work by car you will need to park it in the outskirts and use public transport
Anyway, you need to give them public transport next to a parking area.
To remove as many paper products and chemicals from my home as possible. So far we've been 2 months without paper-towels, and it's EASY. And I've convinced my father to do the same thing :)
Yes, I'm sure motorcycles, scooters, and mopeds will all be part of people's efforts to burn less fuel, both for the money saving and for putting less carbon into the air.
I, too, live in a Seattle apartment. I just moved here from out of state - is there any way to compost food via the city's yard-waste pickup if you don't happen to have an accommodating neighbor? We have a small apartment, with no yard (and hence no need for compost), and are surrounded by apartment buildings.
Thanks!
Too bad there aren't as many pet toys being recalled. Although most of ours wouldn't apply anyway.
Cool to know though, that you often get the rebate back for the full price amount.
I'll bet plenty of parents are psyched about this post!
Tri,
Excellent overview! Thanks for the quick synopsis. I too researched the programs available and felt that you must weigh the pros and cons of the expense. Clearly with the high cost programs I felt that I 'd rather put that money as my first mortgage injection. The cost with some programs are out of reach to some consumers. The companies that offer a good service at a reasonable cost will prevail. The company I mentioned on post #24 has a promotional offer that is a fraction of the cost of other programs. I wish everyone luck on their desire to take personal responsibility for one's finances. And Julie thank you for the open discussion on your blog. Let's educate not bash. Thanks.
You totally took the words right out of my mouth. Last year my son got an activity toy from Target for Christmas. Right about the time he grew tired of it, and it ended up at the bottom of the toy box, Target issued a recall. They are awesome about recalls because they usually offer a gift card for the amount of the toy at it's highest shelf value. So returning the toy that I bought on clearance for $6, got me a $15 Target GC. Which means newer, pricier toys for FREE! (I didn't have a receipt, and had lost most of the accessories that went with it, but they took it back no questions asked!)
And the recall was over something that really wasn't all that serious, so I wasn't freaked at all.
I've been diluting all kinds of liquids without any problems--shampoo, conditioner, cleansers, liquid soap, etc.--it makes everything last so much longer so you'll need to buy less.
More cloth bags--I'm getting pretty good at remembering.
No water bottles!
I'm not turning on the heat until we reach freezing temps!
I just found out last night that you can take your batteries to a Batteries Plus store for recycling, if you have one nearby.
I wasn't able to find any resources on recycling batteries where I live, but we have a Batteries Plus in town and I checked their website and they do claim to recycle batteries.
1) Start recycling all recyclable items in my house
2) Stop using paper products
3) Carpool to work with my husband
4) Stop shopping at Wal-Mart and be a more socially and environmentally conscious shopper.
Your post has inspired me to try riding a bike to work. I've a question, though -- has there been much thought given to the impact fuel efficient motorcycles might have on the environment? Might be a good compromise between cars and bicycles.
I wrote about this topic in Is Infrastructure Destiny?. My priority short-term is to use less energy; long-term is to live in an affordable neighborhood where I can walk safely to an affordable grocery store as well as to the library, restaurants, etc. As our population ages, this arrangement can be both planet-saving and allow people to live independently longer.
1. On every trip to the grocery store, take NO new bags. Either bring cloth tote bags or re-use plastic ones we already have.
2. Add layers (sweater, blanket) before turning up thermostat.
3. Use recycled water on plants, instead of filling a new pitcher.
Will be, of course, an electornic one sent over email. No trees were harmed during this contest.
I started bulk buying again after we moved last year. We bought a chest freezer and the area under the stairs made a great pantry. If your looking for storage jars, the big two gallon glass pickle jars work great. We ended up with a few by buying pickles and I got more by asking people I knew that did events where they served food. I also got some through Freecycle by from someone that saved the empties from church functions.
Popcorn was probably the biggest money saver. We bought an air popper and a huge bag of bulk corn. I have to admit the stupidest one was a bulk jug of yellow mustard. That stuff is cheap and now I have this huge jug taking up fridge space.
The other thing we do is buy multiples when on sale. We do this with shampoo and other non food items like laundry soap. They go on sale periodically so we buy as many as I can easily afford and store them. It also helps to be a creature of habit, we use the same soaps, shampoo, toilet paper, laundry soap and cleaners.
The best way we have found to get thru cold Syracuse NY winters is to use microwaveable corn bags (cloth bags filled with feed corn) for the kidlets to hold when going into chilly beds. Their beds have flannel sheets and many layers of quilts, but still the corn bags help them warm up the bed faster. Plus, the kids still like footed pajamas best to keep warm.
We adults at my house go to bed earlier in the winter months and watch tv in bed. We have a heated mattress pad with dual control (her side is warm, my side goes up to inferno) to keep warm in the evening hours. We turn the mattress pads off when we curl over to sleep. We find our heat can be kept at 62 during the night if we do these things.
Just subscribed to this thread yesterday and today I get a picture of The Blue Block. We have this very same Blue Block Now with Excessive Levels of Lead. I looked it up and it has been recalled. Thanks Wise Bread!
Real story or not, I think we are all missing the point here. Most of us in the middle class will never count ourselves as rich (at least monetarily) because of the way we think about money. As long as we continue to buy depreciating assets (new furniture from the bigbox store, cars, run of the mill wall art and such) and don't bother to use OPM (other people's money), ie leverage, we will continue to wallow in mediocrity! Start thinking outside the box, and you'll go far!
Great post!
I've always wanted to compost my organic waste but I've never been sure how to. Just the other day while I was cooking dinner I went to take out the garbage thinking about how much could actually be composted instead.
You've inspired me to look more into it!
While it is true that you can get into trouble borrowing stupidly with payday loans, I have used them on just a few occasions to avoid overdraft fees with my bank ($34 each item!) and once to cover rent but I alway paid them off and only used the service when I had no other options. But I think all of the politicians that want to legislate these payday loan stores out of business are missing a serious point. Part of living in a free country is that we are free to make our own choices good or bad. When we start trying to legislate behavior I think we are starting down a slippery slope. I don't always agree with the things some people say but I believe in free speach and their right to say it. I wouldn't suggest legislation to keep them from saying something I don't like. Free people are free to make their own choices for better or worse. Better to educate than legislate!
Hello everyone,
I've been researching on using HELOC to accelerate the mortgage pay off and I think I can give a good example of how this technique will work.
Disclaimer: I'm not in the mortgage business nor am I an investment advisor so please don't take my words at face value. In other words, I may be misstating something about how loans work as well.
First off, the UFF site does say (in their FAQ) that this method ONLY works for people who have discretionary income each month. If you don't have any, then it will not work. But if you don't have any to begin with, then surely you cannot implement Julie's method either, as it requires putting in EXTRA monthly payments towards the principal.
To understand why MMA or similar products work, you need to recognize that a fix-rate mortgage is a close-ended, compound-interest type loan and a HELOC is an open-ended, simple-interest type loan.
If you look at your mortgage table that Julie created in her Excel spreadsheet (a big thanks there Julie), you will see that most of your payment goes toward the interest. This is why it is a close-ended loan...because you are paying the money back on a pre-calculated schedule. Whereas with a HELOC, you pay interest only on the outstanding balance for each day, you are not following some pre-established payment schedule.
Now, lets look at an example. Assume a 200K loan, at 6% fixed rate amortize over 30 yrs. Based on Julie's spreadsheet, the total interest paid at the end of 30 yrs is $231,676.56.
For simplicity, assume we also opened up a HELOC at the same time that we established this mortgage. So along with the first payment for the mortgage, we take out $5000 from the HELOC and pay it towards the principal of the mortgage. According to the spreadsheet, we now see that the total interest paid is $206,713.31. An immediate saving of $24,963.25 in interest cost for our $5000.
How much is the interest on that $5000? Well, lets be conservative and simple and make it 10%. $5000 x 0.1 = $500. That $5000 will cost you $500 for the year, or $500/12 = $41.67/month!!!!
Let us assume you have only $500 discretionary income per month. As you can see, in this simplistic case, it will take you about 11 months to pay off the $5000 in your HELOC. $41.67/month x 11 months = $458. So it costs you $458 in interest to use that $5000 from your HELOC to save you $24,963.25 in interest in your mortgage!! WOW!
How we can cut the cost of the interest from the HELOC even more? By using it like a checking account and by using your credit card to make most of your purchases if not all. When you get your paycheck, simply move all that money into the HELOC. What this will do is it will reduce the balance on the HELOC, hence, reducing the interest you have to pay. And by using your credit card to pay for your living expenses, you delay the withdrawal of that money from the HELOC. The longer that money stays in the HELOC, the more you save in interest cost.
So at the end of the month, you transfer some money out of the HELOC to your checking account and write a check to your credit card company to pay off the charges that you have incurred during the month. Keep in mind we assumed to have an extra $500/month discretionary income. Thus, you can now see that at the end of the month, your $5000 HELOC balance will now be reduced to $4500 + the interest for that month.
Lets say you get pay net $3000/month on a bi-monthly basis in the middle and the end of the month. On the 15th, you trasnfer $1500 from you checking to your HELOC account. On the 26th, you transfer $2500 from the HELOC account back to your checking account to pay your credit card company. On the 31st, you get another deposit of $1500 from your employer and you then transfer that into the HELOC.
This is what your HELOC balance will look like:
$5000 (from day 1 to day 14, this balance is used for interest calculation)
$3500 (from day 15 to day 26, this balance is used for interest calculation)
$6000 (from day 27 to day 30, this balance is used for interest calculation)
$4500 (on day 31, this balance is used for interest calculation)
As you can see, the interest is now less than the $41.67/month as your balance did not remain constantly $5000 through out the month. And within 10-11 months, this balance will be paid off and you are ready to begin another $5000 round.
I hope from the discussion above, you can see the effectiveness of using a HELOC to pay down your mortgage faster. But you can also use this approach to pay off any debt you have, not just a mortgage. And as you can see, our HELOC, even though it is pegged at 10% interest, still yielded much less net interest cost than the mortgage interest cost!
Furthermore, you can see that you need extra discretionary income each month to make this work. But the huge benefit is, you can always withdraw the money if you need it (thanks to the HELOC). Whereas if you pay extra towards your mortgage without having a HELOC, you lose access to your equity! Obviously, the more discretionary income you have the quicker you will pay off that $5000 balance and the quicker you can restart the next $5000 round.
Someone had mentioned in a previous post that you need to consider the cost of opening a HELOC. Well, find one that has no cost. Or just roll the cost into the HELOC balance and you can see it still saves you more money. Bank of America offers HELOC at no cost!
Now imagine this scenario: You have been paying an extra $500 per month towards the mortgage without using the HELOC method for 5 years. You are feeling pretty proud of yourself for such discipline. Then you get laid off and can't find a job for a year. Will you be able to cope? Assume your emergency fund runs out before you land another job. Can you still cope now?
You won't be able to draw on your equity because you failed to open up a HELOC. What's worse, you WON'T be able to establish a HELOC now because no bank in their right mind would give you one when you have NO INCOME!!! Now you can see how beneficial the HELOC method is!
Summary:
1. HELOC are open-ended, simple interest loans. Converting money tied in close-ended, compound interest loans to HELOC is the key to dramatic savings in interest cost.
2. Save tens of thousands (if not hundreds of thousands) of dollars in interest cost.
3. Own your home completely in 1/3 to 1/2 the normal 30 yrs span without changes to your normal spending habits.
4. Instant access to your equity at any time.
5. Just because a HELOC interest rate is higher than your mortgage rate doesn't mean you end up paying more interest. You have to analyze your net interest payments for each loan.
One last topic:
Now that you understand how this concept works (I hope you do :-)), should you fork out $3500, or $1999 or even $1250 for a software program to do this for you?
Well, the software will definitely help you "monitor" the progress for your mortgage pay down. It will also do any recalculation necessary in case you are not consistent in getting that discretionary $500/month. But it also maximize the use of the HELOC to help pay down the mortgage in the quickest time (at least that's their claims).
UFF supposedly hired Ph.Ds in mathematics to design their algorithms. And they also invited several math professors to try to beat their software.
I have yet to purchase any software myself as I would like to find out which is the better value.
I smell BULL. I work TWO jobs. I pay NO RENT. I live in a somewhat rural suburb, and there is NO WAY I could live without a car (trust me, I've tried) There's that funny Winter thing around here, so don't bother telling me to walk to work.
I have to pay for my car, I have to pay for insurance, and daily living. You need to figure in other costs as well: time costs being a large part of that, since my fiance works full time, and is a student full time, she's sure not staying home and cooking every night. So shopping can't always be done in bulk, and you can't REALLY live off of Ramen every day either.
If you work full time (40 hours) at minimum wage...you'd made $286.00 a week. good luck with that family of four. Good luck with a family of two for that matter, let alone covering insurance, clothes, rent...not happening.
\/\/
Well, that's kind of the point, isn't it? If you're NOT too cheap to buy a Ferrari, you've probably got a place to store it in Manhattan.
Julie,
(I posted #23 and #24)
I agree that there is a big dilemma regarding taking discretionary income to prepay or invest. Clearly, that decision is based on ROI(return on investment) if you can make more on your investments then it may be the better choice. You must take in to consideration the capital gains and liquidity on the investment. My personal challenge is how much more comfortable will I feel if I own my home outright? Clearly, it would give me a sense of financial freedom, I then can invest my full mortgage amount and accelerate my investment portfolio. It's clearly about personal comfort levels and choices. There are many opinions and "gurus" that would argue for and against all choices. One just needs to take personal financial responsibility and makes choices to secure one's financial goals. It's just like being healthy; everyone knows about it, there are different types of excercises ie. gym, bicycle riding, eating right etc. But you see many in our society that just don't or can't unless they have a plan. I've found a great analogy between buying and owning your home: Would you like to buy your home for $250,000 or own it for $660,000? Clearly the bank wants you to own it for $660,000. My goal: I'd rather own it for as close to the purchase price as I can, that's the key to mortgage acceleration. We Just must do something!! It's not about how much money one has, it's about how one manages the money they have. It's been great taking part in this discussion.
Anton, while I highly doubt the story is true, remember that just because there are multiple versions of a story out there, does not mean that there isn't a real version. Good stories get told over and over again, and details can get tweaked along the way.
And I had a rich great uncle who would have tried this, had he not been too cheap to buy a car worthy of being used as collateral.