Payments Begin

Payments Begin

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Yesterday morning the materials for our home improvements were delivered and are in piles all over the yard — the work should start very soon.

So it seemed appropriate that I’d start paying back all of the money we borrowed today. All of it is still sitting within the grace period, but I’d like to get started on chipping away at the balances.

First, I added my Bank of America checking account to the CitiBank card so that I can make automatic payments though their website. That’s the card that’s a 0% until May of 2008, so it’s not really a high priority, but after the promo rate expires, it will jump up to 13.81%. I’d prefer to have it’s balance at zero, or worst case, under $1000 for when the rate goes up. As of this morning, I have to wait 6 days for them to “verify” my checking account before I can schedule any payments.

Then I transferred $8k from my ING Direct savings account into the checking account for the next payment to the contractors.

Next, I set up a bi-weekly automatic payment of $150 to my business credit card. Right now, that’s the only credit card I still carry in my wallet — it’s not being used at all for the renovation. I generally only charge about $200/month on that card — though it should go up some because I’ve never used it for personal expenses. It will now include gas, the storage unit rent fee, and the occasional expense when I don’t have cash on hand to cover it. The automatic payments alone will cover all charges plus some. And I intend to continue mail monthly payments in whenever I’ve got some left over after paying the BIG credit card bills funding the renovation.

Then, because Bank of America boasts a list of “common payees in your area”, I also added Countrywide Home Loans to my list of payees and set up an automatic payment. Countrywide has always offered an automatic payment plan, but they also charge a $4 fee each month to participate.

That’s not about to happen, but I wonder how it works if I initiate it from the bank’s side instead. We’ll see — to test it out, I set up a $25/week auto-payment to begin on Monday.

I’m very interested to see where the $25 goes. Obviously, I’d prefer it be treated as additional principle, but the bank website doesn’t give you the option of choosing how the mortgage company processes it. Deep down, I have a feeling I’ll be canceling the future auto-payments on Tuesday.

And I know many PF experts say it’s foolish to pay down your mortgage, but I’m currently sill paying PMI at a rate of $85/month. I’m not that far off from eliminating that, and $25/week isn’t going to kill my budget, but it could take a couple of years off of the PMI charges. That, and regardless of what anyone says, the idea of potentially paying off my house by age 40 is very appealing.

(Oh yeah, for those interested, I did manage to pick up the private plane I purchased over the weekend yesterday. Yes, it’s totally awesome!)

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