Mortgage Gamble - From Winner to Loser

A month ago, the State of Connecticut launched a plan to help the poor subprime borrowers out there. I was upset then.

Now, as I’m sure anyone reading this already knows since I’m a few days late, the Federal Government is following suit.

And yes, I’m still upset.

The lending companies gambled by lending money to people who couldn’t afford it. Subprime, adjustable rate, call it whatever you want. The fact is, they loaned money to people who couldn’t afford it. In a lot of ways, they deserve what they’re getting right now.

On the flip side, there are the borrowers. President Bush calls them homeowners. Homeowners who shouldn’t lose their homes. Homeowners we all should feel sorry for. Homeowners that people like you and me should bail out.

But that’s the thing. These “homeowners” took a gamble too. And you know what? They lost.

If the homeowners can’t afford the new adjusted rates, or weren’t wise enough refinance, well, they lost. If the mortgage companies made poor decisions and chose to loan large sums of money to people that they knew couldn’t afford it, well, they lost too. Plain and simple. Sucks to be them. Both of them.

But now the plan is for my tax money to go to bail these “suckers” out. Another blogger, I forget who, said that people who went the traditional 30-year fixed route should get some sort of tax credit or something. I couldn’t agree more.

I took out my loan in September of 2002. Just over 5 years ago — right when all of these “teaser-rates” started being advertised so heavily. I looked at it and knew that it was a gamble. A gamble not worth taking.

I pat myself on the back for my decision 5 years later. It *was* the correct move. But now, the carpet is being swept out from under me. I should have gone with an ARM. I’d have more money in my wallet today — and as the President is planning, for another 5 years to come.

We, who went the 30-year route, played by the rules, paid a little more on our mortgages, and then got screwed in the end. That’s messed up.

Further, this is just delaying things. Okay, fine, the folks in this situation may get another 5 years on their mortgage rates. But what then? It’s inevitable — they can’t afford their homes. Deep down, I hope finally get what they should have had coming this year.

I guess I just don’t like it when losers take advantage of the system and come out winners. But it seems that’s the ‘new’ American way…

Posted on December 7th, 2007 at 10:00 am by Brainy Smurf
Rants, Current Events, Mortgage | No Comments »

Goals for 2008

Yeah, it’s a little early for this, but I’m gonna do it anyway.

First and foremost, my goal for 2008 is to eliminate all credit card debt. This should be completed sometime during the summer of 2008. Done. Finis. Finished.

I’ll still use the cards, I just won’t carry a balance.

Next goal will be to eliminate PMI insurance from my mortgage. This has been costing me an additional $85/month for the past five years. When rolled into the mortgage, it doesn’t seem like that much, but when you do the math, that’s $1020 per year, or another $5100, that could have gone towards the principle.

To meet this goal, I’ll need to knock around $6000 from my mortgage balance.

Broken down, each regular payment in 2008 will pay down around $191, or around $2300 over the year. Right now, I toss in around $150 extra per month, or an additional $1800 over the year.

Combined, that’s a $4100 drop in the principle over the entire year just on its own.

I’ll need to step up an additional $1900, or around $160 per month to meet the goal. Considering it was just last week that I contemplated throwing an additional $250 per week towards the mortgage — this goal should be a sure thing.

The last goal isn’t really a financial one…

I’m going on vacation this year. My wife and I haven’t gone on a vacation since 2004 and that one was a rather miserable camping-in-the-rain experience — though we did see a bull moose up close. That’s much too long to go without a vacation. We should probably start planning it now!

That’s it.

I’m sure I’ll add to it before month’s end, but for now, this works.

Posted on December 3rd, 2007 at 4:21 pm by Brainy Smurf
Finance, Mortgage, Credit Card | 2 Comments »

December 2007: Quest for $1,000,000.00 Dollars

Another month where the market recovered, for the most part, in the last couple days…Without the pseudo-recovery on the last day of the month, my bottom line would have decreased significantly.  Even still, November of 2007 would still have gone down as another month headed in the right direction thanks to some large credit card payments.

For those of us with a high percentage of our wealth in the markets, I’m not sure any of us could have come up positive on the Assets side this month.

And on that side, besides the sizable drop in the 401k balance, things were pretty steady.

I temporarily moved some money from my savings over to checking in order to keep my daily balance above Bank of America’s minimun in order to avoid a service fee.

If the $3,000+ payment I’m waiting for on one of my side income projects comes in soon (God willing) — that savings withdrawl will be re-deposited first thing. But, I’m also considering pulling even more out of savings next month to pay for Christmas and knock down debt more rapidly. I’m still weighing the pros and cons but right now I may even withdraw all of it due to the looming interest rate drop scheduled for December 11th.

The Liabilities portion of my net worth is where most of the action took place.

I didn’t make a mortgage payment this month because I’m far enough ahead to be able to let it slide, so I applied what would have been my mortgage payment to the credit cards instead — and did it ever help!

My Bank of America Business Mastercard should be paid off in full by the end of the year as I’d planned back in October before I’d even given a second thought about this snowball business. That’s going to feel really nice as it’s my highest rate debt (a tolerable 9.9%) right now.

At this pace of nearly $3000 falling off of the total credit card balance per month, I could wipe out all of them (and in doing so, fully pay for the siding project that ran them up so high in the first place) in the next four months.

Unfortunately, I don’t think this pace is sustainable.

You never know though, ’tis the season for bonuses and tax refund time is just around the corner as well. I’m not counting on anything, but we’ll see!

Posted on December 1st, 2007 at 2:24 pm by Brainy Smurf
Finance, Net Worth Updates | No Comments »