but I do think "try before you buy" works to a great extent. I've purchased many things in stores like Discovery because I was able to see how cool they were. But the niche aspect of Discovery Store's products did work against them a little. I will be one of those folks that will miss DCS when it's gone.
Folks - Julie's post is right on the money. Another point to consider is inflation... you will be paying the last portion of your mortgage in el cheapo today dollars.
With 6 percent interest, tax breaks, and given the length of this type of loan... it's really a no-brainer given a large enough investment horizon.
Don't get me wrong, I LOVE the Discovery Channel in HD. I just never understood stores like Discovery or even botiques like Brookstone. People are always going in there to play with the stuff and never buy anything. It's a long time coming I think.
I called one of the Southern California stores and they said they just started their clearance sale last Friday (6/1). They also said most of the other stores are on the same sales schedule.
This is going to be a great chance to pick up gifts for grads and dads.
I used to get my caffeine fix through sodas. Around 6 to 7 cans a day of either coke or mountain dew. When I tried to get my health under control, I did the math and realized I was consuming around 700 to 800 calories this way. It was enough to make me want to quit.
I changed to diet coke at first and then slowly drank less and less. These days I'll have a caffeine free diet coke once a day, but everything else is just water.
My life was tough the first few days after caffeine, but things slowly improved. I no longer fall asleep at meetings. I no longer have those crashes after lunch when my whole body shuts down. I even sleep much better now.
So congratulations to you on your new healthy drinking habit. Believe me, if you can make it stick, you'll never regret it. You'll end up saving money and feeling better.
I haven't used the dentist either - too expensive. But I have gotten an at home tray kit that uses the same gel. It lasts longer than the Crest strips and costs about ths same - although I haven't seen a coupon for it. I think its worth it - check it out. http://www.vitabase.com/supplements/teeth-whitening/prowhite.aspx
I thought I had heart attack last year this time because my heart was pounding, call 911 and they said I was ok. Three days of long heart palpation and later visiting my doctor about it was sufficient enough to forget Coffee. A good dose of fear will force you to take charge of things you neglected for a long time. So, I recommend, free, easy, and very healthy fear to everyone. Remember not all fear is bad; this is healthy one :-)
Since the Dry Ice shops are limited and only open during my work hours, I went to my local grocery store to buy the dry ice. The grocery store only sells it in a 10lb bag so it costs me $12 for this experiment.
It did not work for me, tried it eight times. Even tried it on another car with a tiny ding from people's car door. Maybe the dent is too deep? Someone let the shopping cart roll and hit my car and caused the dent.
I swear if I ever see this happen to anyone else out there, I will take down the information and give it to the owner who has his/her car damaged.
Simply the best tasting coffee substitute. No caffeine and made from soy. Comes in 8 flavors and best of all, it's organic. www.Soycoffee.com . Also visit www.CaffeineAwareness.org for more info about the dangers of decaf.
I never drank coffee ever, but just stopped drinking those energy drinks last month. I started on the Hansen's products about 12 years ago. Even tried taurine pills.(still have 1/2 a bottle) Got to the point where I needed two drinks at a time to get that "buzz", that's like almost $5 bucks a pop. Now I'm going to the gym in the early mornings for a quick workout, & breathing deeper throughout my day to help me keep going. I feel great and have about an extra $25 a week.
The interest on a consolidated loan for multiple student loans is still tax deductible. And loan rates are usually lower than 7-8% on them(I currently pay 3.6%). And as the original poster stated that they have a debt of about 92k, I would suggest that they not try and pay it off too quickly for multiple reasons, 1) your only 24 and if you make you payments on time they go along way to building a good credit score, 2) you may want to look into putting money aside to place a down payment on a home in the near future, 3) it will allow you to place more money into a 401k.
Somehow I became penny stock investor without even clicking on those emails. Computer consulting take lots of time and I don't track my portfolio weekly. So now I have some stocks that are too cheap to sell. Another amazing fact about penny stocks - sometimes they are not related to the companies at all. I have one that went bankrupt and I even saw the auction when their furniture and office equipment were sold. There is nothing left of them, even the domain name was sold, but the stock ticker still shows some volume every day and even price fluctuations.
Thanks for speaking up about Evoca! Our free Evoca Browser Mic plug-ins are available for TypePad, Blogger and Word Press and we have a generic version for everyone else. You also can send and receive private voice mail messages with other Evoca members. If you want to invite voice messages and comments from anyone, anywhere, who isn't (yet!) an Evoca member can acquire a Virtual Voicemail number from us for thousands of U.S. cities and 40 countries around the globe. It's not free but it's affordable and on-so-convenient. Forming groups around topics of interest, works groups and causes (public, semi-public and private) is also part of your membership. Passing the mic, Murem (Evoca CEO)
I tend to think of 6% as a very low interest rate and if you can borrow at a low interest rate and invest and earn a higher one, then I think you should. (When I was just getting started with work, home buying, and investments in the early to mid 1980's, co-workers were getting home loans at 13.25%. My husband and I bought our first home with the help of a guy who was a first in our town: a mortgage loan broker. He snagged a 30-year fixed rate loan of 8.25%.)
You are guaranteed the 6% return and the 10% return is not guaranteed. I tend to be less risk averse than the average person or at least than many of the financial advisors that I've encountered and so would not necessarily speed through my mortgage at such a low rate.
If you have other investments, the guaranteed 6% will lower your overall risk while allowing you to enjoy some market returns (hopefully). If the $100 represents all of your extra cash and you have an either/or situation (either pay off the mortgage quickly or invest ), it would make sense to me to invest some of the money. You don't want to be a 50-year old (assuming you bought a home at 25 years and paid it off early) with no investment experience.
"No, I don't think paying off a 6% loan is the best place to invest your money. If you invested in a fund that matched the S&P over the past 25 years (approximately 10% return), you should have over $125,000 rather than $48,500."
Shouldn't we also be considering the value of the payments after 24 years 7 months? Sure, you've saved 48500 in interest, but you also own the home outright and no longer have to spend 1200/mo on payments.
In the example unaccelerated scenario, you continue to pay 78000 over the course of the next 5 years 5 months. You have the 125k continuing to grow, of course.
Then again, we're assuming that the next 30 years is going to match the last. If you can count on the 10%, the investment scenario works out better, but if you factor in risk, the accelerated mortgage scenario doesn't seem like as bad an idea as it was presented.
Overall, the concepts are similar but much depends on your interest rate; you can certainly use the amortization schedules and plug in your numbers.
Here are the main differences between the mortgage loan and the consolidation loan: 1) the interest on the consolidation loan would most likely not be tax-deductible (so you have less incentive to hang on to that loan); 2) the higher your loan rate, the more advantageous it is to pay it off early as there is less difference between what you can earn in the stock market and the rate you are paying. At 6%, it doesn't make as much sense to pay off the mortgage loan early; at 8%, it starts getting more reasonable. Having savings, investments, money to have fun (to me) is always a good idea.
I graduated a while ago so I don't know a lot (right now) about student loans; but there may be some features to those loans that you would want to keep (rather than consolidating) (that is, can you defer the payments without adding interest until you find a job?). Variable rates are not necessarily bad in themselves but if the rate can rise substantially above the 7-8%, then locking down a rate makes sense.
I'm not saying you should accelerate your mortgage (per earlier discussion with Tony) just how to do it if you want to. A lot depends on your own situation and what your priorities are, how disciplined you are, risk tolerance, etc. But yes, it makes sense that you would invest the mortgage payment in an ETF (exchange-traded fund) to make 10% rather than pay off a mortgage loan with a 6% interest rate.
Trent at The Simple Dollar has a post on this same topic. One thing he considers is placing what you would have paid extra to your mortgage into a savings account or ETF/Index fund, and letting it sit until the balance in that account is equal to your remaining mortgage. Then, pay it off!
This has several advantages: you get a better return on your money and so you accumulate faster than just paying off the principal; you still get the advantage of the full interest ductability; you have that money available to you in case of a dire emergency or to down pay on a new home if you sell early. The biggest con is that you are paying taxes on the interest/dividends you gain, and at some point in time that tax is actually higher than the benefit you get from deducting your interest.
I like this approach, though, and is likely the path I will take. Here's Trent's post .
I find myself at an interesting juncture of my life. I'm 24 years old, and after 18 years as a professional student, it's finally time to begin my actual career.
The problem is, my 4 years of private undergraduate and 2 years of graduate study have racked up quite a debt. $92,000 to be exact.
I'm planning on trying to consolidate all of my loans to lock in the lowest interest rate possible, as some of the loans are variable interest by nature. So I'm probably looking at an average interest rate of 7 or 8 percent.
Is it smarter for me to choose a faster repayment schedule? Or to use the extra money for investments, savings, personal growth, etc.?
Thanks in advance for any responses. And I completely understand if this is outside of everyone's expertise. Thanks again.
kinda sad to see them go
i almost worked there a few years ago... oh well as long as the channels stay on the air i wont be uber devistated
but I do think "try before you buy" works to a great extent. I've purchased many things in stores like Discovery because I was able to see how cool they were. But the niche aspect of Discovery Store's products did work against them a little. I will be one of those folks that will miss DCS when it's gone.
Folks - Julie's post is right on the money. Another point to consider is inflation... you will be paying the last portion of your mortgage in el cheapo today dollars.
With 6 percent interest, tax breaks, and given the length of this type of loan... it's really a no-brainer given a large enough investment horizon.
Don't get me wrong, I LOVE the Discovery Channel in HD. I just never understood stores like Discovery or even botiques like Brookstone. People are always going in there to play with the stuff and never buy anything. It's a long time coming I think.
I love that store and I'll be sad to see it go.
I called one of the Southern California stores and they said they just started their clearance sale last Friday (6/1). They also said most of the other stores are on the same sales schedule.
This is going to be a great chance to pick up gifts for grads and dads.
The facts in this are completly wrong.
I used to get my caffeine fix through sodas. Around 6 to 7 cans a day of either coke or mountain dew. When I tried to get my health under control, I did the math and realized I was consuming around 700 to 800 calories this way. It was enough to make me want to quit.
I changed to diet coke at first and then slowly drank less and less. These days I'll have a caffeine free diet coke once a day, but everything else is just water.
My life was tough the first few days after caffeine, but things slowly improved. I no longer fall asleep at meetings. I no longer have those crashes after lunch when my whole body shuts down. I even sleep much better now.
So congratulations to you on your new healthy drinking habit. Believe me, if you can make it stick, you'll never regret it. You'll end up saving money and feeling better.
Gal
But somepeople like to do Cold Turkey all at once too. In the end, whatever works is best, no?
I haven't used the dentist either - too expensive. But I have gotten an at home tray kit that uses the same gel. It lasts longer than the Crest strips and costs about ths same - although I haven't seen a coupon for it. I think its worth it - check it out. http://www.vitabase.com/supplements/teeth-whitening/prowhite.aspx
I thought I had heart attack last year this time because my heart was pounding, call 911 and they said I was ok. Three days of long heart palpation and later visiting my doctor about it was sufficient enough to forget Coffee. A good dose of fear will force you to take charge of things you neglected for a long time. So, I recommend, free, easy, and very healthy fear to everyone. Remember not all fear is bad; this is healthy one :-)
Since the Dry Ice shops are limited and only open during my work hours, I went to my local grocery store to buy the dry ice. The grocery store only sells it in a 10lb bag so it costs me $12 for this experiment.
It did not work for me, tried it eight times. Even tried it on another car with a tiny ding from people's car door. Maybe the dent is too deep? Someone let the shopping cart roll and hit my car and caused the dent.
I swear if I ever see this happen to anyone else out there, I will take down the information and give it to the owner who has his/her car damaged.
Simply the best tasting coffee substitute. No caffeine and made from soy. Comes in 8 flavors and best of all, it's organic. www.Soycoffee.com . Also visit www.CaffeineAwareness.org for more info about the dangers of decaf.
Try Teeccino herbal coffee:
http://www.teeccino.com/
I swear you'll never notice the difference. Tastes amazing and great flavors to choose from.
I also notice that no caffeine makes me stress out on the little things much less, if at all.
And a hot bath works on the headaches/migraine thing as well. It could be a girl thing though.. ;)
A lot of over the counter pain meds have caffeine: Excedrin, Goody's, BC Powders.
I never drank coffee ever, but just stopped drinking those energy drinks last month. I started on the Hansen's products about 12 years ago. Even tried taurine pills.(still have 1/2 a bottle) Got to the point where I needed two drinks at a time to get that "buzz", that's like almost $5 bucks a pop. Now I'm going to the gym in the early mornings for a quick workout, & breathing deeper throughout my day to help me keep going. I feel great and have about an extra $25 a week.
The interest on a consolidated loan for multiple student loans is still tax deductible. And loan rates are usually lower than 7-8% on them(I currently pay 3.6%). And as the original poster stated that they have a debt of about 92k, I would suggest that they not try and pay it off too quickly for multiple reasons, 1) your only 24 and if you make you payments on time they go along way to building a good credit score, 2) you may want to look into putting money aside to place a down payment on a home in the near future, 3) it will allow you to place more money into a 401k.
Somehow I became penny stock investor without even clicking on those emails. Computer consulting take lots of time and I don't track my portfolio weekly. So now I have some stocks that are too cheap to sell. Another amazing fact about penny stocks - sometimes they are not related to the companies at all. I have one that went bankrupt and I even saw the auction when their furniture and office equipment were sold. There is nothing left of them, even the domain name was sold, but the stock ticker still shows some volume every day and even price fluctuations.
Thanks for speaking up about Evoca! Our free Evoca Browser Mic plug-ins are available for TypePad, Blogger and Word Press and we have a generic version for everyone else. You also can send and receive private voice mail messages with other Evoca members. If you want to invite voice messages and comments from anyone, anywhere, who isn't (yet!) an Evoca member can acquire a Virtual Voicemail number from us for thousands of U.S. cities and 40 countries around the globe. It's not free but it's affordable and on-so-convenient. Forming groups around topics of interest, works groups and causes (public, semi-public and private) is also part of your membership. Passing the mic, Murem (Evoca CEO)
I tend to think of 6% as a very low interest rate and if you can borrow at a low interest rate and invest and earn a higher one, then I think you should. (When I was just getting started with work, home buying, and investments in the early to mid 1980's, co-workers were getting home loans at 13.25%. My husband and I bought our first home with the help of a guy who was a first in our town: a mortgage loan broker. He snagged a 30-year fixed rate loan of 8.25%.)
You are guaranteed the 6% return and the 10% return is not guaranteed. I tend to be less risk averse than the average person or at least than many of the financial advisors that I've encountered and so would not necessarily speed through my mortgage at such a low rate.
If you have other investments, the guaranteed 6% will lower your overall risk while allowing you to enjoy some market returns (hopefully). If the $100 represents all of your extra cash and you have an either/or situation (either pay off the mortgage quickly or invest ), it would make sense to me to invest some of the money. You don't want to be a 50-year old (assuming you bought a home at 25 years and paid it off early) with no investment experience.
Julie, in response to the following:
"No, I don't think paying off a 6% loan is the best place to invest your money. If you invested in a fund that matched the S&P over the past 25 years (approximately 10% return), you should have over $125,000 rather than $48,500."
Shouldn't we also be considering the value of the payments after 24 years 7 months? Sure, you've saved 48500 in interest, but you also own the home outright and no longer have to spend 1200/mo on payments.
In the example unaccelerated scenario, you continue to pay 78000 over the course of the next 5 years 5 months. You have the 125k continuing to grow, of course.
Then again, we're assuming that the next 30 years is going to match the last. If you can count on the 10%, the investment scenario works out better, but if you factor in risk, the accelerated mortgage scenario doesn't seem like as bad an idea as it was presented.
Overall, the concepts are similar but much depends on your interest rate; you can certainly use the amortization schedules and plug in your numbers.
Here are the main differences between the mortgage loan and the consolidation loan: 1) the interest on the consolidation loan would most likely not be tax-deductible (so you have less incentive to hang on to that loan); 2) the higher your loan rate, the more advantageous it is to pay it off early as there is less difference between what you can earn in the stock market and the rate you are paying. At 6%, it doesn't make as much sense to pay off the mortgage loan early; at 8%, it starts getting more reasonable. Having savings, investments, money to have fun (to me) is always a good idea.
I graduated a while ago so I don't know a lot (right now) about student loans; but there may be some features to those loans that you would want to keep (rather than consolidating) (that is, can you defer the payments without adding interest until you find a job?). Variable rates are not necessarily bad in themselves but if the rate can rise substantially above the 7-8%, then locking down a rate makes sense.
I'm not saying you should accelerate your mortgage (per earlier discussion with Tony) just how to do it if you want to. A lot depends on your own situation and what your priorities are, how disciplined you are, risk tolerance, etc. But yes, it makes sense that you would invest the mortgage payment in an ETF (exchange-traded fund) to make 10% rather than pay off a mortgage loan with a 6% interest rate.
Trent at The Simple Dollar has a post on this same topic. One thing he considers is placing what you would have paid extra to your mortgage into a savings account or ETF/Index fund, and letting it sit until the balance in that account is equal to your remaining mortgage. Then, pay it off!
This has several advantages: you get a better return on your money and so you accumulate faster than just paying off the principal; you still get the advantage of the full interest ductability; you have that money available to you in case of a dire emergency or to down pay on a new home if you sell early. The biggest con is that you are paying taxes on the interest/dividends you gain, and at some point in time that tax is actually higher than the benefit you get from deducting your interest.
I like this approach, though, and is likely the path I will take. Here's Trent's post .
-Mike
Greetings everyone.
I find myself at an interesting juncture of my life. I'm 24 years old, and after 18 years as a professional student, it's finally time to begin my actual career.
The problem is, my 4 years of private undergraduate and 2 years of graduate study have racked up quite a debt. $92,000 to be exact.
I'm planning on trying to consolidate all of my loans to lock in the lowest interest rate possible, as some of the loans are variable interest by nature. So I'm probably looking at an average interest rate of 7 or 8 percent.
Is it smarter for me to choose a faster repayment schedule? Or to use the extra money for investments, savings, personal growth, etc.?
Thanks in advance for any responses. And I completely understand if this is outside of everyone's expertise. Thanks again.
Plastic water bottles infact leach toxins into your water. so much for purity