Comments on: Lost My Way & The Power of a Plan http://pantsinacan.com/2008/04/10/lost-my-way-the-power-of-a-plan/ A Personal Finance Blog with a Silly Name Thu, 17 May 2012 20:23:04 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Picking Up the (Payment) Pace » pantsinacan.com http://pantsinacan.com/2008/04/10/lost-my-way-the-power-of-a-plan/#comment-14668 Picking Up the (Payment) Pace » pantsinacan.com Mon, 12 May 2008 17:50:41 +0000 http://pantsinacan.com/2008/04/10/lost-my-way-the-power-of-a-plan/#comment-14668 [...] well into the month of May now, and after my April in the clouds financially, let’s see if I’m on track [...] [...] well into the month of May now, and after my April in the clouds financially, let’s see if I’m on track [...]

]]> By: Emergency Savings - Should I Bother? » pantsinacan.com http://pantsinacan.com/2008/04/10/lost-my-way-the-power-of-a-plan/#comment-5932 Emergency Savings - Should I Bother? » pantsinacan.com Mon, 14 Apr 2008 15:09:38 +0000 http://pantsinacan.com/2008/04/10/lost-my-way-the-power-of-a-plan/#comment-5932 [...] a recent comment, Grant from the Corner Office Blog wisely pointed out that while it’s great that I’m [...] [...] a recent comment, Grant from the Corner Office Blog wisely pointed out that while it’s great that I’m [...]

]]> By: Grant http://pantsinacan.com/2008/04/10/lost-my-way-the-power-of-a-plan/#comment-5540 Grant Sat, 12 Apr 2008 14:43:57 +0000 http://pantsinacan.com/2008/04/10/lost-my-way-the-power-of-a-plan/#comment-5540 It's good that you're so focused on paying off your debt, however, have you made sure you have enough in your emergency savings account? Most say that you should have enough for 6 months worth of expenses, however I think that rule of thumb should vary with the surrounding economic and job environment. If you have a 30-year fixed note on your house, I'd put paying that off early at the bottom of your list. Same with the car. Make the required monthly payment and put the rest in savings until you're comfortable with your cash position. Then, you may want to consider investing with what's left over. Traditionally the stock market has returned an average of 10% over tens of years. 10% beats your mortgage and car payment rate by quite a margin. My point is, it's great not to have any debt, and it's wonderful that you're taking drastic efforts to get to that point, but don't underestimate the power of a huge pile of cold hard cash, just sitting in reserve in case you need it! -Grant It’s good that you’re so focused on paying off your debt, however, have you made sure you have enough in your emergency savings account?

Most say that you should have enough for 6 months worth of expenses, however I think that rule of thumb should vary with the surrounding economic and job environment.

If you have a 30-year fixed note on your house, I’d put paying that off early at the bottom of your list. Same with the car. Make the required monthly payment and put the rest in savings until you’re comfortable with your cash position.

Then, you may want to consider investing with what’s left over. Traditionally the stock market has returned an average of 10% over tens of years. 10% beats your mortgage and car payment rate by quite a margin.

My point is, it’s great not to have any debt, and it’s wonderful that you’re taking drastic efforts to get to that point, but don’t underestimate the power of a huge pile of cold hard cash, just sitting in reserve in case you need it!

-Grant

]]> By: Brainy Smurf http://pantsinacan.com/2008/04/10/lost-my-way-the-power-of-a-plan/#comment-5114 Brainy Smurf Fri, 11 Apr 2008 11:21:24 +0000 http://pantsinacan.com/2008/04/10/lost-my-way-the-power-of-a-plan/#comment-5114 Hi Trent! The rates are very close. The mortgage rate is 6.375% and the auto loan rate is 5.35%. The real deciding factor for me right now is freeing up more monthly cash -- obviously I'm thinking more short term. Paying off the car will eliminate a minimum monthly payment of $289 right off the bat. Paying down the mortgage quickly to eliminate the PMI wouldn't net me anything until the mortgage company re-assesses my escrow account. Best case scenario, that would only free up $85 per month. So I'm thinking it would be wiser to free up the $289 first (paying off the car), then throw that new found money at the mortgage, at which point I'll probably just be reaching the point to eliminate PMI just as they re-calculate my payment... I dunno, short term, it just seems like the smarter move. Hi Trent!
The rates are very close. The mortgage rate is 6.375% and the auto loan rate is 5.35%. The real deciding factor for me right now is freeing up more monthly cash — obviously I’m thinking more short term.

Paying off the car will eliminate a minimum monthly payment of $289 right off the bat. Paying down the mortgage quickly to eliminate the PMI wouldn’t net me anything until the mortgage company re-assesses my escrow account. Best case scenario, that would only free up $85 per month.

So I’m thinking it would be wiser to free up the $289 first (paying off the car), then throw that new found money at the mortgage, at which point I’ll probably just be reaching the point to eliminate PMI just as they re-calculate my payment…

I dunno, short term, it just seems like the smarter move.

]]> By: Trent Hamm http://pantsinacan.com/2008/04/10/lost-my-way-the-power-of-a-plan/#comment-5089 Trent Hamm Fri, 11 Apr 2008 10:10:14 +0000 http://pantsinacan.com/2008/04/10/lost-my-way-the-power-of-a-plan/#comment-5089 You only made the wrong move if your car loan's interest rate is higher than your mortgage interest rate plus PMI. Since I couldn't quickly figure out your rates, I used our own (back when we had a car loan) and they were very close - it's not necessarily a bad move unless you're going strictly by the Dave Ramsey snowball method. You only made the wrong move if your car loan’s interest rate is higher than your mortgage interest rate plus PMI. Since I couldn’t quickly figure out your rates, I used our own (back when we had a car loan) and they were very close – it’s not necessarily a bad move unless you’re going strictly by the Dave Ramsey snowball method.

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