Thanks Julie, you really did a lot of work on this one. It looks like without making additional principal payments, the benefit is so small it's hardly worth the hassle and risk. Thanks for doing the research and number crunching.
Just to add to the list, visit the dollar store and get gift bags, picture frames, a deck of cards, props for your kid's school presentations (e.g., guitar for my son's report on Carl Sandburg), Abbott & Costello DVD, etc. Well, I guess you will need a bit of change to pay for tax - perhaps those in states with no sales tax can make the $1 work for them.
If you had bought Google stock when they had their IPO, you'd have turned $1 into $5+.
Andrea, If you're looking for high-quality American-made clothing, there's a lot on a web site dedicated to American products --www.shopforamerica.com. In addition to clothes, the site sells furniture, guitars, pet supplies, tools, food and more. check it out.
I have a friend who recently traveled to China. Apparently the pollution is so bad that he never saw the sun on a two week trip. Everyone was coughing all the time and half the people on the trip got sick.
Eventually China will have to enact environmental restrictions, which will drive the cost of products up. And already wages are being driven up, and businesses are moving to Vietnam and other countries with cheaper labor.
The cycle will continue until at some point it won't be cheaper to manufacture in other countries. It's just a matter of when. Unfortunately it may be 50 years.
I can't believe I'm reading this. The EXACT thing happened to me. I ordered a Nikon D50 on 3/6 from Camera City, Inc. On 3/7 I got the phone call from CCI and ended up paying $400 more for a D40 with a zoom lens. I never knew there was such a thing as a "gray market" until last night. I wondered why everything with this camera is in Japanese. I never could load the software which is what I wanted to do last night so I could take raw NEF photos. Now it's installed but won't open and I can't delete it because several of the files are locked so every time I boot up I get a message saying Picture Project can't be loaded. I found out about the gray market from Nikon when I tried to download their software and wasn't able to because my serial number was invalid. I haven't talked with Camera City. I thought I would call on Monday. It's been 3 months since I purchased the camera. What do you think I should do?
Has it ever occurred to you, DL, that two people might come up with the same idea? If you go back and read the two lists, you'll find different ideas and different writing styles.
How many "how to get promoted" or "how to land that job" books or articles have even been written? Are all those writers ripping each other off?
These are things that I teach my young students when they complain about or tattle on each other (which is what this criticism about grammar and accusations of plagiarism sound like):
1. Are you saying this just because you want to get the other person in trouble? Or...
2. Are you saying this because you truly want to help.
If it's the first thing, then don't do it. If it's the second, then think about how you would like to be told.
I'm not sure what kind of commenter I am. I think I just want to participate in a lot of blogs and network with people. Hopefully some of it will spill into traffic for me! I admit it! I'm a traffic whore!
However, I'm married, and married people can get away with a lot more since we're not trying to please the opposite sex.
You know, as far as I can tell, wearing a different outfit every day has never impressed a man (or a woman). I've never dated a guy who noticed the little things that I freak out about (bad hair day, etc.). And when I'm attracted to a guy, I really won't notice much other than his sense of humor.
I'm sure some people are different, but I still think that most women dress to please not he opposite sex, but other women.
The thing about Wise Bread is that we want to allow ourselves and others enough leeway to enjoy buying stuff while still being fiscally responsible. All of us need certain things like coats and shoes, but should we buy a crappy coat made in, oh, Vietnam or Turkey, or a really good one made here in the US? I'm kind of torn - I'd like a coat to last a few years, of course, but I also don't want to be wearing the same coat ten years from now.
Does anyone know of an efficient way to remove these dents? The bigger dents are easier to remove than the smaller ones I think, especially shopping cart dents that are so small and deep. I call it a DING not a DENT and I think they are sometimes worse than dents because a dent can be pulled out. It really bothers me that the person who did this didn't even have respect enough to leave even a "Sorry" note, I could often care less if someone dings my car as long as they say they are sorry or at least leave me their number so I can call them and see if they care enough to apologize and accept responsibility for their actions. Why are people so lame?!
If you paid $2500 on the first or primary mortgage in the first month (30-year 6% fixed rate), then you would save $11,891.21 in interest (original total payments of $431,678.38 less the actual total payment of $419,787.17) and would pay the mortgage off in 348 months.
First -- and this is not the scenario you were thinking of but rather the one I was thinking of -- if you just borrowed the $2500 from a HELOC with a fixed 7%, you would have an average daily balance of $2500 plus $15 in interest for that first month. Since you are not paying any extra, your HELOC balance is going to increase over time. If you did a very simple calculation using the Future Value stream of payments, then the FV of $15 per month at 7% interest for 348 months is $16,892.51. If you then realized that this monthly interest is added to the balance every month and grows exponentially, then your balance on the HELOC is going to be $18,813.53. So you have spent $19K to save $12K.
If you could manage to have 15 days rather than 30 days of an outstanding balance, then it seems that you would pay just $7.29 per month of interest and the FV of this stream of payments is $8209.76 (7% for 348 months). However, you will be paying interest on top of interest (assuming that you do not have any extra cash and so never pay off this interest) in addition to the loan balance. So your loan balance is really more than $8209.76, it's $9406.77. Now that you've paid off the $200,000 mortgage 12 months early, you can pay off the line of credit balance. You should be able to do that fairly quickly in 8 months with a total interest cost of $243.13. So the total interest you've saved is $2241.31 ($11,891.21-9406.77-243.12).
Perhaps this is a no-cost way of saving $2241.31. You have spent 29 years making sure that your balance never went more than 15 days. But besides having to be ever vigilant over this time frame, my concerns are: 1) while it makes sense that if you only have the balance out there for 15 of the 30 days each month ($2500 loan balance for 15/30 days = $1250), the bank may have a slightly different way of calculating average daily balance (does this mean I am cynical?) and 2) it may be difficult to have less than 15 days of a balance as there may be settlement periods of 3-5 days for your direct deposit and then you may need to write checks out of your account early enough (5-10 days) to reach your creditors and avoid any late charges. But the fewer days of a balance then the less interest you would have to pay.
Excellent diatribe, and I totally agree. However, I just try not to buy stuff at all. I try to get as many wears as possible out of my stuff, and although my clothes aren't the latest in style, I'm not unstylish. However, I'm married, and married people can get away with a lot more since we're not trying to please the opposite sex.
So basically, slow down your consumption rate by simply buying less stuff. We don't need a different outfit for every day of the month. I don't care if I've already worn this shirt 4 days ago. No one remembers, and if they do, then they need to get a life. We need to stop trying to live for appearance.
Some of these program-sellers keep mentioning how things are done in the UK and Australia. Thanks for giving the specifics http://www.oneaccount.com/onev3/toa/toa-landing.html. With this product, you have 1 loan at 1 interest rate all bundled into an account with checking, savings, etc. In this way, you can manage your cash flow -- pay off balances early if you'd like or borrow if you'd like. Fortunately, it does come with a warning that failure to keep up with payments can lead to foreclosure.
I'm right there with you, the crap we get from China isn't quality and in some cases when I shop around and do find a product not made in China half the time it is cheaper, go figure. I work hard not to feed the crap monster.
If you're looking for well-made clothes, I can personally attest to the durability of Anvil tee shirts. My aunt bought me an over sized screened Anvil tee when I was eight. I'm twenty now and the t-shirt is still raging on strong. Only a couple holes in the hem, 100% solid everywhere. Well, the neck is stretched out, but considering it was meant for an 8-year-old head and it now goes over my fat head, I don't think that's unreasonable. They also take silk screening incredibly well. Twelve years and hundreds of washings later, it's just starting to fade and crack. The color integrity of the shirt itself is pretty amazing. Not perfect, but impressive.
I asked her how much the shirt cost her. She laughed and admitted that she bought it off some silly souvenir shop in Pennsylvania. "I couldn't have spent more than $10 on it."
I disagree - I think there IS a benefit without making additional principal payments. I'm having trouble calculating the exact benefit, so let me try through an example.
Let's say you have a $200k mortgage, and make $5k a month. Let's also say you have a $1500 mortgage payment, and spend the remaining $3500. This leaves you with no extra money to apply to principal.
1) With a "normal" mortgage, you'll pay your $1500 every month, and your principal goes down a small amount.
2) Now say you take out a HELOC for the same amount as your monthly income, $5k, and apply this directly to your mortgage. Your paychecks get direct deposited into this HELOC and your bills get paid out of it, and depending on the exact timing of when you get paid and when your bills are due, you could say that the average daily balance is $2500.
So how are these two different? In #1 you pay interest on $200k. In #2 you pay interest on $197.5k. What I can't figure out is how significant that is, but it is definitely different and you have not contributed anything extra to principal. You're benefiting from the difference in how interest is calculated on a mortgage (monthly) and a HELOC (daily). Also the benefit should increase over time. The price you pay is the difference in interest rates as well as any fees associated with it.
I'm not saying U First is selling a good product, but that there is some sense to what they're saying.
I originally submitted this question after hearing a news interview with the author of this book: http://www.amazon.com/How-Your-Home-Years-Sooner/dp/0974267600
I haven't read the book, although there are some interesting comments from people who have. He recommends using a HELOC as a way to reduce interest payments.
Thanks for discussing this, and for dealing with a stubborn Wise Bread reader :)
to open our future child a savings account. We didn't like what any of them had to offer. As a child 20+ years ago, I used to delight in watching the pages in my passbook fill up with interest deposits that had accrued between my meager deposits and withdrawals. 10 cents, 18 cents, 32 cents. I don't think I ever had more than $60 in at one time before I hit my teens.
Nowadays, I have $400 in my Christmas savings account at my credit union, where I earned all of a dollar ten in interest in 2006. We were Frustrated to the point where we simply put money in her little red piggybank. At least then we didn't have to pay for the gas to deposit every $5 to make 0.002% interest!
2 years ago we were referred to a high yield online bank. I don't think I've been this excited since I was a kid. We're really earning interest now... more interest than we're paying on our truck loan (with the credit union). Saving is finally worth it again! So I'm teaching my 3 year old online banking. At this point, that's mostly what we do anyhow... after snotty tellers, long lines where my little one whines and squirms, and the gas money it took to cross town JUST to throw $30 in there, most of the time, brick and mortar isn't worth it. I mainly use them for coin rolls and garage sale change now!
Thanks for sharing these four tips. Good stuff and you've made it nice and simple. We asked a group of leadership development experts to give us their thoughts on how to set better goals. Thought you might find it interesting...
I am not sure what you mean by the "resulting benefit." There is not a benefit to using the HELOC -- if you don't pay extra, you don't pay off the principal early, period. What I have tried to explain is that the program works by making additional payments and lowering your outstanding loan balance. And, interestingly, my "the other way" works out precisely to number of months the video says it will. Now, if you took out a 6% HELOC to pay off a 7% mortgage loan, perhaps you could find some benefit but not the other way around.
Thanks for all your work on this post - I find it really interesting. I'm unable to view the U first video on their site (currently at work), but I did find this:
Also there seems to be a problem with the comparison done in your spreadsheet. You model the $3500 cost of "The Other Way" correctly, however you don't model the resulting benefit.
The calculation isn't simple, which is why I've been having so much trouble with it. It sounds like the U first system provides software that tells you when to transfer money from your HELOC to your mortgage such that you maintain the smallest possible revolving balance.
I don't think the software is worth $3500, however I can't figure out how to calculate exactly how much you'd be saving. The claims of paying off a mortgage in 8-10 years always comes from also making additional payments; I'm curious how much time is shaved off by making no additional payments and just by making your payments differently via the HELOC.
I had discovered many similar stories in my research, but the part that blows me away is how many more animals are culled due to the hypocritical regulations of the USDA, which is really there to serve big business as you so rightly say. Thank you for a very well written comment.
The term ceased to have meaning once the USDA got involved. The standards for "organic"
have been pushed to the edge of the envelope and benefit the large producer.
Dean Foods is a good example of this principle.
My experience as a small farmer here in Pennsylvania has taught me that “Certified Naturally Grown” is a better way to go for both the producer & the consumer.
Not to mention much cheaper.
The dairy where I buy my raw/real milk is not Organic but is Certified Naturally Grown.
The USDA Certification Organic fees & waiting period was too cost prohibitive for that farm. The restriction of antibiotics was also a problem.
For them it was
“ Paying money to the government to prove I’m doing everything thing right.”
I am a small farmer with sheep and I struggle to KEEP my 6 generation family farm.
I had a very negative and similar experience years ago when I considered going Organic myself.
I was shocked at the level of corruption and cronyism
What is more, I would not subject my animals to often arbitrary and ridiculous regulations.
Sheep are notorious for needing assistance during lambing and at least once or twice every year I have to help out and deliver lambs.
When I insert my hands into a ewe’s uterus to save her life & that of her lambs, she must be covered with an antibiotic or she will die.
I don’t have pockets deep enough to cull every ewe that needs a shot of penicillin.
According to the USDA Organic Standards the ewe I helped is now worth only what she'll bring to me at the sale barn or by private treaty.
Maybe $40 if I'm lucky.
This is a bad situation because the numbers of sheep flocks are down already in the US and don't need any more help from stupid government regulations.
What's more, I own a Certified Scrapie Free flock & that only makes the whole thing more idiotic.
Scrapie is is similar to BSE.
It is imperative that there are safe breeding flocks of sheep in the US. To cull a young and genetically safe ewe because she needed a shot to save her life is insane.
Food Safety is all about trust and BIG GOVERNMENT has made our food less safe not more safe.
It is very important to know who is feeding you & exactly WHERE your food came from.
Large milk producers most often use co-ops and milk co-op’s are not always a good idea for the consumer or the producer either.
The bottom fell out of the local goat dairy co-op in my area due to gross mismanagement and was a financial disaster for a few of my neighbors. Once again the little producer got screwed.
I think milk Co-ops by their nature are a problem waiting to happen - especially for the hapless Consumer.
When milk is hauled & delivered from 100 different farms and each farm has on average 50 - 200 cows, the chances of bad milk going through the line is dramatically increased.
Smaller & local is much better.
I a negative opinion of Organic because I know better.
Since the USDA has become involved in Organic,the Consumer is less safe not more safe.
Organic is a label that means almost nothing and exists primarily to benefit the big producer.
Thanks Julie, you really did a lot of work on this one. It looks like without making additional principal payments, the benefit is so small it's hardly worth the hassle and risk. Thanks for doing the research and number crunching.
When people read this drivel they will become paranoid and probably think they are going through what you described. L2Play NOOOOOOOB
Just to add to the list, visit the dollar store and get gift bags, picture frames, a deck of cards, props for your kid's school presentations (e.g., guitar for my son's report on Carl Sandburg), Abbott & Costello DVD, etc. Well, I guess you will need a bit of change to pay for tax - perhaps those in states with no sales tax can make the $1 work for them.
If you had bought Google stock when they had their IPO, you'd have turned $1 into $5+.
Andrea, If you're looking for high-quality American-made clothing, there's a lot on a web site dedicated to American products --www.shopforamerica.com. In addition to clothes, the site sells furniture, guitars, pet supplies, tools, food and more. check it out.
I have a friend who recently traveled to China. Apparently the pollution is so bad that he never saw the sun on a two week trip. Everyone was coughing all the time and half the people on the trip got sick.
Eventually China will have to enact environmental restrictions, which will drive the cost of products up. And already wages are being driven up, and businesses are moving to Vietnam and other countries with cheaper labor.
The cycle will continue until at some point it won't be cheaper to manufacture in other countries. It's just a matter of when. Unfortunately it may be 50 years.
I can't believe I'm reading this. The EXACT thing happened to me. I ordered a Nikon D50 on 3/6 from Camera City, Inc. On 3/7 I got the phone call from CCI and ended up paying $400 more for a D40 with a zoom lens. I never knew there was such a thing as a "gray market" until last night. I wondered why everything with this camera is in Japanese. I never could load the software which is what I wanted to do last night so I could take raw NEF photos. Now it's installed but won't open and I can't delete it because several of the files are locked so every time I boot up I get a message saying Picture Project can't be loaded. I found out about the gray market from Nikon when I tried to download their software and wasn't able to because my serial number was invalid. I haven't talked with Camera City. I thought I would call on Monday. It's been 3 months since I purchased the camera. What do you think I should do?
Nice list but i have to disagree with you on #75. A dollar bill is totally washable
Has it ever occurred to you, DL, that two people might come up with the same idea? If you go back and read the two lists, you'll find different ideas and different writing styles.
How many "how to get promoted" or "how to land that job" books or articles have even been written? Are all those writers ripping each other off?
These are things that I teach my young students when they complain about or tattle on each other (which is what this criticism about grammar and accusations of plagiarism sound like):
1. Are you saying this just because you want to get the other person in trouble? Or...
2. Are you saying this because you truly want to help.
If it's the first thing, then don't do it. If it's the second, then think about how you would like to be told.
I'm not sure what kind of commenter I am. I think I just want to participate in a lot of blogs and network with people. Hopefully some of it will spill into traffic for me! I admit it! I'm a traffic whore!
You can always start your own personal embargo against China. =)
The last part is kind of sad:
However, I'm married, and married people can get away with a lot more since we're not trying to please the opposite sex.
You know, as far as I can tell, wearing a different outfit every day has never impressed a man (or a woman). I've never dated a guy who noticed the little things that I freak out about (bad hair day, etc.). And when I'm attracted to a guy, I really won't notice much other than his sense of humor.
I'm sure some people are different, but I still think that most women dress to please not he opposite sex, but other women.
The thing about Wise Bread is that we want to allow ourselves and others enough leeway to enjoy buying stuff while still being fiscally responsible. All of us need certain things like coats and shoes, but should we buy a crappy coat made in, oh, Vietnam or Turkey, or a really good one made here in the US? I'm kind of torn - I'd like a coat to last a few years, of course, but I also don't want to be wearing the same coat ten years from now.
But that's just vanity. :)
Does anyone know of an efficient way to remove these dents? The bigger dents are easier to remove than the smaller ones I think, especially shopping cart dents that are so small and deep. I call it a DING not a DENT and I think they are sometimes worse than dents because a dent can be pulled out. It really bothers me that the person who did this didn't even have respect enough to leave even a "Sorry" note, I could often care less if someone dings my car as long as they say they are sorry or at least leave me their number so I can call them and see if they care enough to apologize and accept responsibility for their actions. Why are people so lame?!
Okay, I think this is what you are looking for...
If you paid $2500 on the first or primary mortgage in the first month (30-year 6% fixed rate), then you would save $11,891.21 in interest (original total payments of $431,678.38 less the actual total payment of $419,787.17) and would pay the mortgage off in 348 months.
First -- and this is not the scenario you were thinking of but rather the one I was thinking of -- if you just borrowed the $2500 from a HELOC with a fixed 7%, you would have an average daily balance of $2500 plus $15 in interest for that first month. Since you are not paying any extra, your HELOC balance is going to increase over time. If you did a very simple calculation using the Future Value stream of payments, then the FV of $15 per month at 7% interest for 348 months is $16,892.51. If you then realized that this monthly interest is added to the balance every month and grows exponentially, then your balance on the HELOC is going to be $18,813.53. So you have spent $19K to save $12K.
If you could manage to have 15 days rather than 30 days of an outstanding balance, then it seems that you would pay just $7.29 per month of interest and the FV of this stream of payments is $8209.76 (7% for 348 months). However, you will be paying interest on top of interest (assuming that you do not have any extra cash and so never pay off this interest) in addition to the loan balance. So your loan balance is really more than $8209.76, it's $9406.77. Now that you've paid off the $200,000 mortgage 12 months early, you can pay off the line of credit balance. You should be able to do that fairly quickly in 8 months with a total interest cost of $243.13. So the total interest you've saved is $2241.31 ($11,891.21-9406.77-243.12).
Perhaps this is a no-cost way of saving $2241.31. You have spent 29 years making sure that your balance never went more than 15 days. But besides having to be ever vigilant over this time frame, my concerns are: 1) while it makes sense that if you only have the balance out there for 15 of the 30 days each month ($2500 loan balance for 15/30 days = $1250), the bank may have a slightly different way of calculating average daily balance (does this mean I am cynical?) and 2) it may be difficult to have less than 15 days of a balance as there may be settlement periods of 3-5 days for your direct deposit and then you may need to write checks out of your account early enough (5-10 days) to reach your creditors and avoid any late charges. But the fewer days of a balance then the less interest you would have to pay.
Excellent diatribe, and I totally agree. However, I just try not to buy stuff at all. I try to get as many wears as possible out of my stuff, and although my clothes aren't the latest in style, I'm not unstylish. However, I'm married, and married people can get away with a lot more since we're not trying to please the opposite sex.
So basically, slow down your consumption rate by simply buying less stuff. We don't need a different outfit for every day of the month. I don't care if I've already worn this shirt 4 days ago. No one remembers, and if they do, then they need to get a life. We need to stop trying to live for appearance.
There was my diatribe :)
Some of these program-sellers keep mentioning how things are done in the UK and Australia. Thanks for giving the specifics http://www.oneaccount.com/onev3/toa/toa-landing.html. With this product, you have 1 loan at 1 interest rate all bundled into an account with checking, savings, etc. In this way, you can manage your cash flow -- pay off balances early if you'd like or borrow if you'd like. Fortunately, it does come with a warning that failure to keep up with payments can lead to foreclosure.
I'm right there with you, the crap we get from China isn't quality and in some cases when I shop around and do find a product not made in China half the time it is cheaper, go figure. I work hard not to feed the crap monster.
If you're looking for well-made clothes, I can personally attest to the durability of Anvil tee shirts. My aunt bought me an over sized screened Anvil tee when I was eight. I'm twenty now and the t-shirt is still raging on strong. Only a couple holes in the hem, 100% solid everywhere. Well, the neck is stretched out, but considering it was meant for an 8-year-old head and it now goes over my fat head, I don't think that's unreasonable. They also take silk screening incredibly well. Twelve years and hundreds of washings later, it's just starting to fade and crack. The color integrity of the shirt itself is pretty amazing. Not perfect, but impressive.
I asked her how much the shirt cost her. She laughed and admitted that she bought it off some silly souvenir shop in Pennsylvania. "I couldn't have spent more than $10 on it."
I disagree - I think there IS a benefit without making additional principal payments. I'm having trouble calculating the exact benefit, so let me try through an example.
Let's say you have a $200k mortgage, and make $5k a month. Let's also say you have a $1500 mortgage payment, and spend the remaining $3500. This leaves you with no extra money to apply to principal.
1) With a "normal" mortgage, you'll pay your $1500 every month, and your principal goes down a small amount.
2) Now say you take out a HELOC for the same amount as your monthly income, $5k, and apply this directly to your mortgage. Your paychecks get direct deposited into this HELOC and your bills get paid out of it, and depending on the exact timing of when you get paid and when your bills are due, you could say that the average daily balance is $2500.
So how are these two different? In #1 you pay interest on $200k. In #2 you pay interest on $197.5k. What I can't figure out is how significant that is, but it is definitely different and you have not contributed anything extra to principal. You're benefiting from the difference in how interest is calculated on a mortgage (monthly) and a HELOC (daily). Also the benefit should increase over time. The price you pay is the difference in interest rates as well as any fees associated with it.
I'm not saying U First is selling a good product, but that there is some sense to what they're saying.
I originally submitted this question after hearing a news interview with the author of this book:
http://www.amazon.com/How-Your-Home-Years-Sooner/dp/0974267600
I haven't read the book, although there are some interesting comments from people who have. He recommends using a HELOC as a way to reduce interest payments.
Thanks for discussing this, and for dealing with a stubborn Wise Bread reader :)
to open our future child a savings account. We didn't like what any of them had to offer. As a child 20+ years ago, I used to delight in watching the pages in my passbook fill up with interest deposits that had accrued between my meager deposits and withdrawals. 10 cents, 18 cents, 32 cents. I don't think I ever had more than $60 in at one time before I hit my teens.
Nowadays, I have $400 in my Christmas savings account at my credit union, where I earned all of a dollar ten in interest in 2006. We were Frustrated to the point where we simply put money in her little red piggybank. At least then we didn't have to pay for the gas to deposit every $5 to make 0.002% interest!
2 years ago we were referred to a high yield online bank. I don't think I've been this excited since I was a kid. We're really earning interest now... more interest than we're paying on our truck loan (with the credit union). Saving is finally worth it again! So I'm teaching my 3 year old online banking. At this point, that's mostly what we do anyhow... after snotty tellers, long lines where my little one whines and squirms, and the gas money it took to cross town JUST to throw $30 in there, most of the time, brick and mortar isn't worth it. I mainly use them for coin rolls and garage sale change now!
Hi Sarah,
Thanks for sharing these four tips. Good stuff and you've made it nice and simple. We asked a group of leadership development experts to give us their thoughts on how to set better goals. Thought you might find it interesting...
I am not sure what you mean by the "resulting benefit." There is not a benefit to using the HELOC -- if you don't pay extra, you don't pay off the principal early, period. What I have tried to explain is that the program works by making additional payments and lowering your outstanding loan balance. And, interestingly, my "the other way" works out precisely to number of months the video says it will. Now, if you took out a 6% HELOC to pay off a 7% mortgage loan, perhaps you could find some benefit but not the other way around.
Julie,
Thanks for all your work on this post - I find it really interesting. I'm unable to view the U first video on their site (currently at work), but I did find this:
http://youtube.com/watch?v=D_URQoEblKE
Also there seems to be a problem with the comparison done in your spreadsheet. You model the $3500 cost of "The Other Way" correctly, however you don't model the resulting benefit.
The calculation isn't simple, which is why I've been having so much trouble with it. It sounds like the U first system provides software that tells you when to transfer money from your HELOC to your mortgage such that you maintain the smallest possible revolving balance.
I don't think the software is worth $3500, however I can't figure out how to calculate exactly how much you'd be saving. The claims of paying off a mortgage in 8-10 years always comes from also making additional payments; I'm curious how much time is shaved off by making no additional payments and just by making your payments differently via the HELOC.
Now that we have three J names blogging for us, I will refer to all of you as 'J' to avoid any further embarrassing mishaps. Sorry. :)
I had discovered many similar stories in my research, but the part that blows me away is how many more animals are culled due to the hypocritical regulations of the USDA, which is really there to serve big business as you so rightly say. Thank you for a very well written comment.
In my opinion "organic" is a rip off.
The term ceased to have meaning once the USDA got involved. The standards for "organic"
have been pushed to the edge of the envelope and benefit the large producer.
Dean Foods is a good example of this principle.
My experience as a small farmer here in Pennsylvania has taught me that “Certified Naturally Grown” is a better way to go for both the producer & the consumer.
Not to mention much cheaper.
The dairy where I buy my raw/real milk is not Organic but is Certified Naturally Grown.
The USDA Certification Organic fees & waiting period was too cost prohibitive for that farm. The restriction of antibiotics was also a problem.
For them it was
“ Paying money to the government to prove I’m doing everything thing right.”
I am a small farmer with sheep and I struggle to KEEP my 6 generation family farm.
I had a very negative and similar experience years ago when I considered going Organic myself.
I was shocked at the level of corruption and cronyism
What is more, I would not subject my animals to often arbitrary and ridiculous regulations.
Sheep are notorious for needing assistance during lambing and at least once or twice every year I have to help out and deliver lambs.
When I insert my hands into a ewe’s uterus to save her life & that of her lambs, she must be covered with an antibiotic or she will die.
I don’t have pockets deep enough to cull every ewe that needs a shot of penicillin.
According to the USDA Organic Standards the ewe I helped is now worth only what she'll bring to me at the sale barn or by private treaty.
Maybe $40 if I'm lucky.
This is a bad situation because the numbers of sheep flocks are down already in the US and don't need any more help from stupid government regulations.
What's more, I own a Certified Scrapie Free flock & that only makes the whole thing more idiotic.
Scrapie is is similar to BSE.
It is imperative that there are safe breeding flocks of sheep in the US.
To cull a young and genetically safe ewe because she needed a shot to save her life is insane.
Food Safety is all about trust and BIG GOVERNMENT has made our food less safe not more safe.
It is very important to know who is feeding you & exactly WHERE your food came from.
Large milk producers most often use co-ops and milk co-op’s are not always a good idea for the consumer or the producer either.
The bottom fell out of the local goat dairy co-op in my area due to gross mismanagement and was a financial disaster for a few of my neighbors. Once again the little producer got screwed.
I think milk Co-ops by their nature are a problem waiting to happen - especially for the hapless Consumer.
When milk is hauled & delivered from 100 different farms and each farm has on average 50 - 200 cows, the chances of bad milk going through the line is dramatically increased.
Smaller & local is much better.
I a negative opinion of Organic because I know better.
Since the USDA has become involved in Organic,the Consumer is less safe not more safe.
Organic is a label that means almost nothing and exists primarily to benefit the big producer.