OT: US stock market set to crash Tuesday morning

[The Black Hand ®]

On the positive side, we have 95% employment, which is historically very good. I would suspect the majority of the 5% that don't have jobs don't want jobs.

 

Not true. The face of unemployment is changing. Sure, if you lose a $60,000 a year job and can shift your career focus to Burger King, things are just great.

 

Highly skilled and out of work

Long-term joblessness spreads in the middle class

http://www.msnbc.msn.com/id/22764445/

 

If you have a good job and get laid off, get ready for a long and bumpy ride.

 

 

It's true, 95% emplyment looks good on paper, but most of the jobs are low on wages and light on benefits. The global economy, along with our complacency, is helping to create a very large working poor class.

[Mac Man]

... I got my loan Summer 2006 and mine is right around 6 even. I wonder if I am able to refinance and lock in at a lower rate? I did it with my car, but that's about 10x smaller... anyone know about this?

 

Right now it will not be worth it, even with this rate cut. Yields really have more to do with dropping mortgage rates more so than the fed funds rate. If you are locked in right now at 6.0% that is great.

 

Mortgage rates will continue to fall, but remember if you refinance you are going to have to pay again a closing cost. Now how much depends on how cheap of a rate you get. So for example, right now, say you go an offer for 5.75% with $3000 out of pocket to close, it might not make sense for you. Unless of course you need to pull capital out and have built up some equity, that is a different story.

 

Ah! See, that's what I asked. I forgot that you'd need to include a closing cost on a refinance. I'm a new homeowner, so hopefully a little bit of ignorance is allowed. I guess with the right interest rate and low enough cost to finance it, this could be a viable option. Obviously, I would still look to keep the monthly payment the same, but it'd be nice knowing more of money was going towards the principle and not the interest. Might be worth a 5-minute call to my bank.

 

I know this has been tossed around the boards a lot, but as mentioned before, as long you live within your means, there shouldn't be any real reason to have to unload your collections. Of course, unpredicated things such as layoffs, etc, will factor in, but on the whole, I do think attempting to curtail "shiny-object syndrome" would go a long way with preventing the heartache of selling off stuff due to over-spending.

[Scott Summers]

... I got my loan Summer 2006 and mine is right around 6 even. I wonder if I am able to refinance and lock in at a lower rate? I did it with my car, but that's about 10x smaller... anyone know about this?

 

Right now it will not be worth it, even with this rate cut. Yields really have more to do with dropping mortgage rates more so than the fed funds rate. If you are locked in right now at 6.0% that is great.

 

Mortgage rates will continue to fall, but remember if you refinance you are going to have to pay again a closing cost. Now how much depends on how cheap of a rate you get. So for example, right now, say you go an offer for 5.75% with $3000 out of pocket to close, it might not make sense for you. Unless of course you need to pull capital out and have built up some equity, that is a different story.

 

Ah! See, that's what I asked. I forgot that you'd need to include a closing cost on a refinance. I'm a new homeowner, so hopefully a little bit of ignorance is allowed. I guess with the right interest rate and low enough cost to finance it, this could be a viable option. Obviously, I would still look to keep the monthly payment the same, but it'd be nice knowing more of money was going towards the principle and not the interest. Might be worth a 5-minute call to my bank.

 

I know this has been tossed around the boards a lot, but as mentioned before, as long you live within your means, there shouldn't be any real reason to have to unload your collections. Of course, unpredicated things such as layoffs, etc, will factor in, but on the whole, I do think attempting to curtail "shiny-object syndrome" would go a long way with preventing the heartache of selling off stuff due to over-spending.

 

 

I would recommend you go to Ditech.com and use their smart calculator. Find out what your payments would be under a hypothetical scenario interest rate of say 5.5%, 5.25% etc. Then figure in like $3K for closing costs and see how many years it will take to break even.

 

For instance, if you are saving $40 on your monthly payment with the refi, than it is going to take you a little more than 6 years to recoop that closing cost.

 

Also this is so critical and the banks will make you overlook this. You got your mortgage back in 2006 so you have made something like what 18 payments??? So if you refi a new mortgage and start from scratch all over again, you are basically now extending the new mortgage and away those 18 payments in terms of the pure time frame you need to cough up a monthly payment be it 25 year term or 30 year term.

 

What I would also suggest you do, is look into making one extra payment a year completely to principle. This will reduce your mortage by probably like 4 or 5 years possibly.

[carcrawfordfan]

... I got my loan Summer 2006 and mine is right around 6 even. I wonder if I am able to refinance and lock in at a lower rate? I did it with my car, but that's about 10x smaller... anyone know about this?

 

Right now it will not be worth it, even with this rate cut. Yields really have more to do with dropping mortgage rates more so than the fed funds rate. If you are locked in right now at 6.0% that is great.

 

Mortgage rates will continue to fall, but remember if you refinance you are going to have to pay again a closing cost. Now how much depends on how cheap of a rate you get. So for example, right now, say you go an offer for 5.75% with $3000 out of pocket to close, it might not make sense for you. Unless of course you need to pull capital out and have built up some equity, that is a different story.

 

Ah! See, that's what I asked. I forgot that you'd need to include a closing cost on a refinance. I'm a new homeowner, so hopefully a little bit of ignorance is allowed. I guess with the right interest rate and low enough cost to finance it, this could be a viable option. Obviously, I would still look to keep the monthly payment the same, but it'd be nice knowing more of money was going towards the principle and not the interest. Might be worth a 5-minute call to my bank.

 

I know this has been tossed around the boards a lot, but as mentioned before, as long you live within your means, there shouldn't be any real reason to have to unload your collections. Of course, unpredicated things such as layoffs, etc, will factor in, but on the whole, I do think attempting to curtail "shiny-object syndrome" would go a long way with preventing the heartache of selling off stuff due to over-spending.

 

 

I would recommend you go to Ditech.com and use their smart calculator. Find out what your payments would be under a hypothetical scenario interest rate of say 5.5%, 5.25% etc. Then figure in like $3K for closing costs and see how many years it will take to break even.

 

For instance, if you are saving $40 on your monthly payment with the refi, than it is going to take you a little more than 6 years to recoop that closing cost.

 

Also this is so critical and the banks will make you overlook this. You got your mortgage back in 2006 so you have made something like what 18 payments??? So if you refi a new mortgage and start from scratch all over again, you are basically now extending the new mortgage and away those 18 payments in terms of the pure time frame you need to cough up a monthly payment be it 25 year term or 30 year term.

 

What I would also suggest you do, is look into making one extra payment a year completely to principle. This will reduce your mortage by probably like 4 or 5 years possibly.

 

We (my family) owns a mortgage company in Ohio and I think you are giving pretty sound advice. The extra payment a year really should reduce your loan. Today we have a 5.375% fixed on a 30 year and we should have a 5.250% by the end of the day. I would guess they are going to be below 5% in the next couple of weeks as the Fed is set to drop the rates again at the Jan. 30th meeting. If you can save .75% or more over the life of the loan it is really going to add up over 360 payments. If you guys have any specific mortgage questions I would be happy to help you to the best of my ability.

[Mr. Zipper]

On the positive side, we have 95% employment, which is historically very good. I would suspect the majority of the 5% that don't have jobs don't want jobs.

 

If most people could do and stick to a simple budget, they would have no problems in their lives. If you don't spend money that you don't have (i.e. credit cards), then you won't get in trouble.

 

Wow. Where'd you get your PhD in socio-economics? Clown College?

 

He's half right.

 

Not even! If you guys think that the only people who find themselves in a bad financial situation are "those who don't want jobs" or people who rack up heavy debt by making too many trips to BestBuy or Macy's, you're living in an ivory tower isolated from the real world.

 

I was simply agreeing with the general notion that if people lived within their means -- that is, did not use credit to buy things they could not afford -- most people would be okay. Certainly there are people who do things the right way and get into bad situations through job loss or medical bills, but one would think most [middle class] people who get into trouble do so because they succumb to the "credit culture I deserve it" mentality. That is, they have huge car payments, second mortgages and just charge stuff they have no business buying because they can't afford it. And let's face it... if you have to charge it -- you can't afford it!

 

We are a culture drowning in debt. Just listen to Dave Ramsey any day of the week. Case after case of people on small salaries who have credit card debt of $50k and up. And what do they have to show for it? Even they don't know.

[Scott Summers]

... I got my loan Summer 2006 and mine is right around 6 even. I wonder if I am able to refinance and lock in at a lower rate? I did it with my car, but that's about 10x smaller... anyone know about this?

 

Right now it will not be worth it, even with this rate cut. Yields really have more to do with dropping mortgage rates more so than the fed funds rate. If you are locked in right now at 6.0% that is great.

 

Mortgage rates will continue to fall, but remember if you refinance you are going to have to pay again a closing cost. Now how much depends on how cheap of a rate you get. So for example, right now, say you go an offer for 5.75% with $3000 out of pocket to close, it might not make sense for you. Unless of course you need to pull capital out and have built up some equity, that is a different story.

 

Ah! See, that's what I asked. I forgot that you'd need to include a closing cost on a refinance. I'm a new homeowner, so hopefully a little bit of ignorance is allowed. I guess with the right interest rate and low enough cost to finance it, this could be a viable option. Obviously, I would still look to keep the monthly payment the same, but it'd be nice knowing more of money was going towards the principle and not the interest. Might be worth a 5-minute call to my bank.

 

I know this has been tossed around the boards a lot, but as mentioned before, as long you live within your means, there shouldn't be any real reason to have to unload your collections. Of course, unpredicated things such as layoffs, etc, will factor in, but on the whole, I do think attempting to curtail "shiny-object syndrome" would go a long way with preventing the heartache of selling off stuff due to over-spending.

 

 

I would recommend you go to Ditech.com and use their smart calculator. Find out what your payments would be under a hypothetical scenario interest rate of say 5.5%, 5.25% etc. Then figure in like $3K for closing costs and see how many years it will take to break even.

 

For instance, if you are saving $40 on your monthly payment with the refi, than it is going to take you a little more than 6 years to recoop that closing cost.

 

Also this is so critical and the banks will make you overlook this. You got your mortgage back in 2006 so you have made something like what 18 payments??? So if you refi a new mortgage and start from scratch all over again, you are basically now extending the new mortgage and away those 18 payments in terms of the pure time frame you need to cough up a monthly payment be it 25 year term or 30 year term.

 

What I would also suggest you do, is look into making one extra payment a year completely to principle. This will reduce your mortage by probably like 4 or 5 years possibly.

 

We (my family) owns a mortgage company in Ohio and I think you are giving pretty sound advice. The extra payment a year really should reduce your loan. Today we have a 5.375% fixed on a 30 year and we should have a 5.250% by the end of the day. I would guess they are going to be below 5% in the next couple of weeks as the Fed is set to drop the rates again at the Jan. 30th meeting. If you can save .75% or more over the life of the loan it is really going to add up over 360 payments. If you guys have any specific mortgage questions I would be happy to help you to the best of my ability.

 

Thanks. Do you mind me asking what the closing fees would be on a refi say for that 5.375 30 year fixed?

[Mac Man]

Yeah, my bank recommended I make an extra payment every year as well and I did last summer. We have a split mortgage and I made the full payment on the smaller of the two (I think that loan's interest is actually a little higher than 6%. I was just wondering if this was a viable option to continue to knock down the principle a little more.

[carcrawfordfan]

We charge about $1000, add in another $200-$800 in bank fees (depending on the bank) and about $1000 for title fees and then whatever you would need for escrows and you are probably looking at about $2500-3000 total. You can usually roll this into your loan if you have equity. These fees vary from state to state and company to company, but can be an ok guideline.

[Mr. Zipper]

What I would also suggest you do, is look into making one extra payment a year completely to principle. This will reduce your mortage by probably like 4 or 5 years possibly.

 

We pay an extra $25 a month plus one extra payment a year. Using a mortgage calculator we figured it would reduce our 30 year mortgage by almost 7 years and reduce the total cost by over $30,000.

 

 

 

[carcrawfordfan]

Yeah, my bank recommended I make an extra payment every year as well and I did last summer. We have a split mortgage and I made the full payment on the smaller of the two (I think that loan's interest is actually a little higher than 6%. I was just wondering if this was a viable option to continue to knock down the principle a little more.

 

Sure it is. Just make sure your lender is applying the overage to the principle and not the interest. Some lenders take it upon themselves to apply it to the interest or even take it as the next payment. This will obviously not help that much.

[Dale Roberts]

On the positive side, we have 95% employment, which is historically very good. I would suspect the majority of the 5% that don't have jobs don't want jobs.

 

If most people could do and stick to a simple budget, they would have no problems in their lives. If you don't spend money that you don't have (i.e. credit cards), then you won't get in trouble.

 

Wow. Where'd you get your PhD in socio-economics? Clown College?

 

He's half right.

 

Not even! If you guys think that the only people who find themselves in a bad financial situation are "those who don't want jobs" or people who rack up heavy debt by making too many trips to BestBuy or Macy's, you're living in an ivory tower isolated from the real world.

 

I was simply agreeing with the general notion that if people lived within their means -- that is, did not use credit to buy things they could not afford -- most people would be okay. Certainly there are people who do things the right way and get into bad situations through job loss or medical bills, but one would think most [middle class] people who get into trouble do so because they succumb to the "credit culture I deserve it" mentality. That is, they have huge car payments, second mortgages and just charge stuff they have no business buying because they can't afford it. And let's face it... if you have to charge it -- you can't afford it!

 

We are a culture drowning in debt. Just listen to Dave Ramsey any day of the week. Case after case of people on small salaries who have credit card debt of $50k and up. And what do they have to show for it? Even they don't know.

 

EXACTLY. Figure out how much you earn and spend less. No I am not talking about everyone. There are people who have had extremely bad luck with health,etc. I am talking about the majority of people who feel the need to put up an appearance of having much more money than they have, and buying things that they really can't afford. I also am talking about all of the 20 & 30 somethings who spend more time playing with a playstation or Wii than trying to earn a living. As Dave would say, you don't deserve anything that you don't go out and earn.

 

[skypinkblu]

On the positive side, we have 95% employment, which is historically very good. I would suspect the majority of the 5% that don't have jobs don't want jobs.

 

If most people could do and stick to a simple budget, they would have no problems in their lives. If you don't spend money that you don't have (i.e. credit cards), then you won't get in trouble.

 

Wow. Where'd you get your PhD in socio-economics? Clown College?

 

Unemployment is traditionally higher in the winter, especially Dec. 5%, sad though it is, is not actually so out of wack with figures in the past 20 -25 years. This year the NE was much warmer than other years, what usually happens in warm winters, is the slow down in construction and other weather related industries tend to move on later, and the figures reflect that.

I don't have a degree in socio ecomonics, just Poli Sci, however, I served on most of the major committees dealing with unemployment in NYS for a lot of years...oh I also commuted with the guy who puts out the UI figures for many years, and he's a dear friend.

 

Unfortunately, Dale has a point...lots of people who lost jobs, AGAIN, sad though it was...weren't that open to change...we dealt with some major layoffs in the past few years, and 9/11 and people who were flexible, stuggled, but sometimes wound up better if they were realistic.

 

I don't want to sound unsympathetic, I'm not...but common sense goes a long way.

 

I agree in paying off your mortgage, my husband is an accountant and that is exactly what we did. I also made a decision to put my funds in stable income ...about 7 years ago...risk vs reward...I didn't want an ulcer. I may not have made the huge gains others did...but then again, I didnt' have to worry about losing them.

 

One other thought...some of the sky is falling drama, that is causing all these changes...seems a bit like special interests lobbying for changes that will help their cause...

 

Macman, just keep going the way you are...sounds like a plan...and Black Hand...I brought my lunch a LOT;)

[The Black Hand ®]

What I would also suggest you do, is look into making one extra payment a year completely to principle. This will reduce your mortage by probably like 4 or 5 years possibly.

 

We pay an extra $25 a month plus one extra payment a year. Using a mortgage calculator we figured it would reduce our 30 year mortgage by almost 7 years and reduce the total cost by over $30,000.

 

 

 

We did a similar thing and paid off our residence about seven years ago and maybe 6 years earlier. Owning a home is an expensive enough proposition that it's nice to not have a monthly payment. Because of prop 13 here in california our property taxes are quite reasonabl. Of course there is still plenty of money a large, old home can eat up and although I provide most of the labor, my body isn't holding up as well as it used to. We have a portion subdividable for old age money, but I'd rather not, since I love the space and the privacy it affords, although the maintanance is problematic.

[The Troll King]

I'd like to follow up on a suggestion made a several posts ago about making an additional house payment every year and how much it helps in reducing interest and principal over the term of the note.

 

If you look at a year as 52 weeks divided by 4 weeks for a month you come up with 13 4 week months.

 

That said, many of us get paid based on a period of every two weeks. You probably know this because there are some months were you receive 3 paychecks instead of 2. That said, if you've put yourself on a twice a month payment schedule for bills, take that additional check in those 3 check months and use it to either pay off debt or towards an additional house payment.

 

In the long term you're going to save a ton on interest.

 

Also I'd like to throw something in there for those that find all of this interest rate stuff confusing. 99% of the time the lowest advertised rate from a lender is a rate at which you have to BUY points to get there. (I've been in the title industry long enough to see ridiculous refinancing going on)

 

Just because BofA or Countrywide (soon to be the same?) advertise 5.25 doesn't mean you'll get that rate, even if you have a FICO of 800.

 

Also to note... and this is a biggie... whenever the rates are cut like this, you need to be on the phone with your credit card companies negotiating a lower interest rate. You'd be surprised how often they're willing and able to drop your rate and usually they're not going to come right out and offer it to you. They expect people to call and negotiate them.

[carcrawfordfan]

I'd like to follow up on a suggestion made a several posts ago about making an additional house payment every year and how much it helps in reducing interest and principal over the term of the note.

 

If you look at a year as 52 weeks divided by 4 weeks for a month you come up with 13 4 week months.

 

That said, many of us get paid based on a period of every two weeks. You probably know this because there are some months were you receive 3 paychecks instead of 2. That said, if you've put yourself on a twice a month payment schedule for bills, take that additional check in those 3 check months and use it to either pay off debt or towards an additional house payment.

 

In the long term you're going to save a ton on interest.

 

Also I'd like to throw something in there for those that find all of this interest rate stuff confusing. 99% of the time the lowest advertised rate from a lender is a rate at which you have to BUY points to get there. (I've been in the title industry long enough to see ridiculous refinancing going on)

 

The rates I previously quoted are with 0 points. I would agree you should always check and see if the advertised rates do include this.

 

Just because BofA or Countrywide (soon to be the same?) advertise 5.25 doesn't mean you'll get that rate, even if you have a FICO of 800.

 

Also to note... and this is a biggie... whenever the rates are cut like this, you need to be on the phone with your credit card companies negotiating a lower interest rate. You'd be surprised how often they're willing and able to drop your rate and usually they're not going to come right out and offer it to you. They expect people to call and negotiate them.

[The Black Hand ®]

One of the things that I've had to guard against is impulse purchasing, so I've learned to have a two week waiting period before I buy any non essential item. I've found that by doing this, I usually realise that I don't need the item.

[Mr. Zipper]

One of the things that I've had to guard against is impulse purchasing, so I've learned to have a two week waiting period before I buy any non essential item. I've found that by doing this, I usually realise that I don't need the item.

 

Very wise.

 

Also, always pay cash (or checking card online). Funny how it's much harder to peel bills out than hand over a piece of plastic. This really cuts down on the impulse buys.

[VintageComics]

One of the things that I've had to guard against is impulse purchasing, so I've learned to have a two week waiting period before I buy any non essential item. I've found that by doing this, I usually realise that I don't need the item.

 

Very wise.

 

Also, always pay cash (or checking card online). Funny how it's much harder to peel bills out than hand over a piece of plastic. This really cuts down on the impulse buys.

 

Very good advice. I've been using this "wait a few weeks" concept for years and it works. You'd be amazed at how much stuff you forget about. I figure if it's gnawing away at me after a month or two, then I either really need it or really want it.

 

R.

 

 

[skypinkblu]

I'd like to follow up on a suggestion made a several posts ago about making an additional house payment every year and how much it helps in reducing interest and principal over the term of the note.

 

If you look at a year as 52 weeks divided by 4 weeks for a month you come up with 13 4 week months.

 

That said, many of us get paid based on a period of every two weeks. You probably know this because there are some months were you receive 3 paychecks instead of 2. That said, if you've put yourself on a twice a month payment schedule for bills, take that additional check in those 3 check months and use it to either pay off debt or towards an additional house payment.

 

In the long term you're going to save a ton on interest.

 

Also I'd like to throw something in there for those that find all of this interest rate stuff confusing. 99% of the time the lowest advertised rate from a lender is a rate at which you have to BUY points to get there. (I've been in the title industry long enough to see ridiculous refinancing going on)

 

Just because BofA or Countrywide (soon to be the same?) advertise 5.25 doesn't mean you'll get that rate, even if you have a FICO of 800.

 

Also to note... and this is a biggie... whenever the rates are cut like this, you need to be on the phone with your credit card companies negotiating a lower interest rate. You'd be surprised how often they're willing and able to drop your rate and usually they're not going to come right out and offer it to you. They expect people to call and negotiate them.

 

This makes SO much sense...and what Zipper does, too...

 

Some banks suggest changing to bi-weekly payments, since it automatically decreases your payment time. What my husband tells his clients, is that you are better off, making separate payments for extra principal, that way you have the check stubs in case there is a miscalculation at the end, also if something does happen (like needing roof repairs)...you can not pay the extra that one month, instead of being committed. Keep the extra check stubs, though.

 

When my daughter was born, we had a bunch of credit card debt, my job had been paying the same as my husbands and I just couldn't work full time in the beginning, we didn't have adequate childcare...my good friend told me what she did to pay everything off...she figured out her budget, then cashed her paycheck, paid herself first (made a payment she had figured out on the credit cards) then she took the rest and put in envelopes...$ for food/ $ transportation...whatever she had figured out she needed. Then she paid for EVERYTHING in cash until her credit card debt was gone...I did that same thing...(only I had one envelope as a slush fund for entertainment;) Once I paid off those credit cards, I never charged another thing that I didn't KNOW I could pay off that same month.

 

It really helps.

[Scott Summers]

I'd like to follow up on a suggestion made a several posts ago about making an additional house payment every year and how much it helps in reducing interest and principal over the term of the note.

 

If you look at a year as 52 weeks divided by 4 weeks for a month you come up with 13 4 week months.

 

That said, many of us get paid based on a period of every two weeks. You probably know this because there are some months were you receive 3 paychecks instead of 2. That said, if you've put yourself on a twice a month payment schedule for bills, take that additional check in those 3 check months and use it to either pay off debt or towards an additional house payment.

 

In the long term you're going to save a ton on interest.

 

Also I'd like to throw something in there for those that find all of this interest rate stuff confusing. 99% of the time the lowest advertised rate from a lender is a rate at which you have to BUY points to get there. (I've been in the title industry long enough to see ridiculous refinancing going on)

 

Just because BofA or Countrywide (soon to be the same?) advertise 5.25 doesn't mean you'll get that rate, even if you have a FICO of 800.

 

Also to note... and this is a biggie... whenever the rates are cut like this, you need to be on the phone with your credit card companies negotiating a lower interest rate. You'd be surprised how often they're willing and able to drop your rate and usually they're not going to come right out and offer it to you. They expect people to call and negotiate them.

 

Good stuff. They are definitely "teasers" for certain & creates the wrong perception, but still a perception none the less. Hey have you seen on TV or heard on the radio these new commercials that not only will show how to reduce debt, but ELIMINATE it all together They have all these testimonials about how this guy paid off his 5 year car loan in less than a year and another guy who eliminated a 30 year mortgage in like 4 years.

 

Has anyone had first hand experience with creditors in this kind of scenario or maybe in "settling" they care to share.

 

There is one other thing I wanted to toss out there. This is a new concept and I have seen it but not with a legitimate recognized bank, but essentially your mortgage account becomes the central point just like your checking. But all of your deposits go right into it directly and against the debit principle balance. So what this does is maximize the time in terms of days in the month of your expenditures. The longer you can hold say your automatically deposited paycheck against the balance in time, the less interest you pay. I saw this work on a 20 year graph and the curve was very impressive. I will try to fish out a link.