Rolling Up the Red Carpet on Leases

Last night on the NBC news, there was a story about how the big 3 automakers in Detroit are scaling back their options for leasing new vehicles.

GM and Ford are increasing the rate to lease SUV’s and pick-ups. Chrysler’s going so far as to remove the option of a lease entirely.

Hardly surprising.

At the end of a 24-48 month lease, these gas guzzlers are essentially worthless. The whole idea of ‘renting out’ this type of vehicle is a money pit for the manufacturers. That’s why it makes sense.

But at the tail end of the story, the field reporter said something along the lines of, “Americans will soon be forced to drive automobiles that they can afford,” like it was a bad thing.

My wife and I just bemusedly looked at one another and chuckled.

Wow, can you imagine that?

Only being able to drive something that you can actually afford?

How dare they!

It’s sad that things have gotten to the point in this country where you can drive a Cadillac Escalade on a welfare budget.

Evidently, that’s about to change. From where I’m standing, that’s a good thing.

Posted on July 31st, 2008 at 11:38 am by Brainy Smurf
Current Events | 2 Comments »

An Entire Year of Doom-And-Gloom… or not.

For much of the day yesterday, the headline on CNBC’s website read, “Wall Street Hangs On As Credit Crisis Hits 1st Year”.

My first thought was, “Has it really been a year?”

I don’t really remember all of the non-stop doom and gloom reporting starting until well into the fall. Looking through the PIAC archives, I didn’t really make mention of a “credit crisis” until March of this year when I wished the Fed would stop screwing around with interest rates in a feeble attempt to control things that were never in their control anyway.

So, since it has apparently been an entire year, I thought I’d go back and reflect on how far I’ve come (or gone) since then. You know, with the economy in free fall, home prices dropping, and credit apparently impossible to acquire, how have things gone?

Back on July 31, 2007, we were in the midst of having $26k worth of work done on our house. In fact, I’d just written the check for the final payment on the project.

Heading into August, my net worth had dropped 12% for two consecutive months. Ouch.

Not exactly how you want to start off a recession… though no one was calling it that back then. Still, in hindsight, one would have assumed I was headed for disaster. It’s like I stumbled before I even reached the gate…

My credit card debt was riding high again hovering at $18,820 — some at a high interest rate. All of my debts combined totaled $147,627.

But things weren’t spiraling downward. Not to my knowledge, at least…

A few months passed, the media started talking up foreclosures, the “crisis” word was thrown around, and Jim Cramer went ape on the live television.

Later, the government would send me a check that I didn’t really need, a bank I’d never heard of would fail, and more people would lose their homes — a friend included (though they totally deserved it.)

So now, one year into this “mess”, my debts only total around $115k.

That’s down $32k from 12 months ago.

No, I didn’t even cheat by filing for bankruptcy or something. No government assistance either. No freebies at all — well, except that Stimulus Check, but I didn’t ASK for that…

I’m pretty proud of the pace that I’ve maintained…

And at this rate, I’ll take a credit crisis, recession, mortgage-meltdown, or whatever other name they have for it today any time.

Sure, my 401k has remained pretty stagnant for the past 12 months, but that’s long term stuff anyway. Doesn’t affect my day-to-day finances at all. Warren Buffet has long said that he doesn’t care about the next quarter — it’s the next 20 years that really count. I’ll have to agree with him on this one.

Work hard, stick to your guns, and don’t try to cheat the system. That’s what I did. That’s also what others in my situation (i.e. doing just fine) have done too.

By doing that, none of this mindless doom-and-gloom reporting has really mattered in the short run. If anything, it’s lining us up to be in an even better situation once things turn around…

If you’re interested, here’s the CNBC link to the story I took the headline from.

Posted on July 31st, 2008 at 7:42 am by Brainy Smurf
Current Events, Finance, Life, Motivation, Success | 1 Comment »

Nailed with Foreign Transaction Fees

As expected, CitiBank hit me on my latest statement with some Foreign Transaction Fees we unknowingly incurred while we were on vacation earlier this month.

On my last statement, they charged me $5 for one Canadian transaction that I made online to buy some CFL football tickets.

Naturally, though I’d made the initial purchase weeks in advance, they didn’t display that additional fee on my “latest transactions” until after I’d already made 6 more purchases while in Canada. Gee, thanks…

You see, the Metro Toronto Zoo was a pretty good deal and I enjoyed the meerkats, but had I known that it was costing me an additional $5 each time I pulled out my Citi MasterCard, I probably would have kept it in my pocket.

So on this latest statement that came out this morning, I was kind of expecting $30 in foreign transactions fees, you know, $5 multiplied by 6. That would make sense…

But I was incorrect.

The foreign transaction fee listed on my latest statement is $31.33.

No explanation of where that number comes from. It doesn’t even divide evenly?! Just some arbitrary number apparently…

I’m not going to call them on it. I’m just moving on and chalking it up as a learning experience: I won’t be using their card in Canada ever again.

Adding insult to injury, the transaction fee didn’t even get me reward points.

Posted on July 30th, 2008 at 7:54 am by Brainy Smurf
Credit Card, Rants, Vacation | 2 Comments »

Simplifying Things Around Here

Beginning this Friday, I’ve decided to simplify my monthly net worth chart.

Who really cares about the numbers at the start of the year? And are all the percentages really necessary?

I don’t think so.

So starting August 1, the chart will only display the past month’s progress. Really, that’s all that matters anyway.

Maybe at the end of the year, I’ll do a full year recap with a big confusing chart where I’m the only person who can make sense of it, but maybe not.

The past few months, a number of PF bloggers have stopped reporting their net worth all together. Most recently, Lazy Man comes to mind.

The greats, like JD from Get Rich Slowly or Trent from The Simple Dollar have never really done monthly updates at all — and they’re still great!

But there’s something to be said for sites like Consumerism Commentary where Flexo has illustrated how he’s taken his net worth from as low as $13k in December of 2003 all the up to nearly $156k just last month — month-by-month.

It gives his words, stories, and advice, I don’t know, some credibility, I guess.

It gives you that, “Hey look what this person did… I can do that too!” feeling.

Some might find the monthly updates to be boring posts, but for me, the real numbers people use on their own sites are most inspiring in a “keeping up with the Joneses” sort of way…

Maybe it’s just me…

Posted on July 29th, 2008 at 3:33 pm by Brainy Smurf
Blogging?, Net Worth Updates | No Comments »

Re: Carnival of Debt Reduction

My ‘Red Zone Finances‘ article just made the cut for this week’s “Carnival of Debt Reduction” hosted over at DebtFREE-Revolution.

Among the other selected submissions, there are some great strategies listed for paying down debt — creatively and in a hurry.

Check ‘em out!

Posted on July 28th, 2008 at 3:12 pm by Brainy Smurf
Blogging? | No Comments »

Not So ‘Cuil’ Debut…

Not sure how the founders of Cuil (pronounced like “cool”) hope to stick it to their former employer, Google, when all their site has been displaying is:

I wish them luck, but there have been quite a few Google challengers over the past few years…  None have been successful.

Yahoo is still hanging on (How? I have no idea…), but unless Cuil offers something really really new and exciting, well, they’ll go the way of Magellan — my original search engine of choice — in a matter of months…

Posted on July 28th, 2008 at 3:03 pm by Brainy Smurf
Computers, Current Events, Retro | 1 Comment »

Debt in America

For most of last week, the talking heads had been gawking over the rising amount of debt American’s are carrying. The number thrown about was $8565 per household, apparently up almost 15 percent since 2000. And that’s just credit card debt.

I’m not really surprised. I’ve carried a lot more credit card debt than that with regularity.

Can you imagine if they roped in auto loan debt? I’d guesstimate that the average 2-car household owes more than $20k to someone just on their auto loans.

Student loans? Well, I think that those are more limited to people under 35. Tuition didn’t get stupid until the late 1980′s.

I don’t have student loans, but some of my friends do. My sister has ‘em. Roll those into the equation, double it to make it a household number and, well, yeah, Americans are definitely carrying a lot of debt.

That’s pretty sad.

As a result, I’m all but certain that most people are only a paycheck or two away from living on the street — to a degree, myself included. And my non-mortgage debt is under $4k!?

How can this be?

The real story isn’t actually the debt people are carrying — it’s really a case of our expenses.

In my case, my monthly expenses routinely exceed $2500.

It doesn’t take a skilled mathematician to tell you that if my income were suddenly non-existent, I could only continue on for a few weeks, at best.

What the general population needs to come to grips with is that it doesn’t matter if you make a $100,000 a year when you then go out spend $101,000… You’re not not getting anywhere.

You’re actually going backwards. Again, simple math indicates that.

I’m semi-guilty of that sort of mindset. I got a raise and bought a BMW.

Wanna talk about stupid?

Yeah, that was stupid.

Posted on July 28th, 2008 at 7:37 am by Brainy Smurf
Current Events, Finance, Mistakes | No Comments »

Financing the Mortgage the Old Fashioned way

Right now, I’ve got $2056 more to go to hit my latest benchmark on the mortgage.

Yeah, the 78/22 percentage mark that I’m still unsure about. Will it qualify me to cancel Mortgage Insurance? I still don’t know for sure.

But assuming it will, I think I’ve come up with a plan to get there without having to finance it using a 0% credit card offer, which as I mentioned yesterday is something I’m not totally comfortable with doing.

The statistic bantered around the media this week was that the average household’s credit card debt is $8565, up almost 15 percent from 2000. For me, 2008 marks the first year since 1998 that I’ve been below that mark. I was carrying over $20k for a good 5 years…

With this new idea, I won’t need to borrow anything…

With my weekly auto-payment of $150 towards the mortgage each Monday, and one more Monday remaining this month, the amount needed will decrease to $1906.

Currently, I’ve got just over $1000 in my ING Savings account. Let’s say I take $1000 from there and throw it at the mortgage too. Now I’ve only got to come up with $906 more.

As luck would have it, July is a three-paycheck month for me and it just so happens that, as a result, I’ll have $906 to spare…

With that, I can hit the mark on the first of August without having to finance anything!

The good news with this strategy is that I won’t be carrying a balance on any of my credit cards. I like the feeling of that.

On the downside, money will be *really* tight for the month of August. I don’t like the feeling of that.

I’ll make my decision this week.

Posted on July 27th, 2008 at 7:53 am by Brainy Smurf
Finance | No Comments »

To Borrow, or not to Borrow…

The idea of taking advantage of the 0% offer Chase is dangling at my nose is really getting to me.

I’ve put together all kinds of charts plotting out how much I’d save if I did this or if I did that.

Eh, let’s borrow an extra $4k and just wipe out the car loan at the same time. That’s the most recent variation.

Grant over at Clever Dude recently took the bait offered him by Citibank.

His offer was a 0% balance transfer offer with a 3% fee capped at $75.

I’d have probably taken that deal too — even if it isn’t for a full 12 months.

Logging into my own Citi account, my offer isn’t really comparable. Not only do I have a lower credit limit on that card, but my fee isn’t capped… at all.

Um, no thanks.

So it’s back to Chase. $19,200 available, 0% for 12 months, and a 3% transaction fee capped at $199.

Hmmmmm…

A little over a year ago now, I did the arbitrage thing and I didn’t get burned.

But it didn’t work out exactly as planned either. I didn’t exploit the fact that I’d borrowed money at 0% by earning a nice (at the time 4-plus percent) rate of return in some savings account.

I’d planned to do that, I just didn’t.

Instead, I ended up using most of it to finance home improvement projects.

It wasn’t a complete backfire, but not really a success either. Yeah, I saved a little money, but I certainly didn’t make any.

Clever Dude had the same problem last time he tried to pull off one of these arbitrage moves. He ended up paying off a car instead and, well, probably saved some money but didn’t actually make any.

He’s in a different position now — he CAN make money because he doesn’t have funds tabbed for anything. Yeah, he still has an auto loan but, well, you can read his entire post…

As for me, I’m not there yet. I’ve still got a car loan at 5.35% and the ever-annoying PMI issue to deal with.

To eliminate both of those, I’d have to take up my 0% offer for at least $6k.

Borrowing that little, my 3% transaction fee would be $180 — doesn’t even hit the $199 cap. To me, that means I should borrow more, you know, to at least take some advantage of the cap…

But at the same time, I’ve started to grow accustomed to not carrying any credit card debt. Do I really want to dig myself into that hole again?

Sure, if I borrowed, say $10k, I’d send $2k to the mortgage, $4k to Toyota, and then put the remaining $4k in my ING account to accrue interest.

At the current rate, that $4k in savings would “earn” me around $120. That doesn’t even cover the transaction fee.

And is a “free” $120 worth going back to carrying a credit card balance for another year? Not to me…

And technically, factoring the $60 or so of interest saved by paying off the car, it really works out to a complete wash…

$180 transaction fee – $120 ING interest earned – $60 Auto Loan interest saved = $0

So now I’m leaning the direction of NOT borrowing and just staying the course…

Posted on July 26th, 2008 at 7:04 am by Brainy Smurf
Credit Card, Finance, Savings | 1 Comment »

Two Tiered Pricing: Cash or Charge?

Remember when it was routine to be asked, “Cash or charge?”

I’m too young to have ever been asked that question. Or so I thought…

Around a month ago, a Hess station not too far from my house went retro. They started asking that question again because they started selling gas for two different prices. Paying cash got you a 10-cent/gallon discount.

Within 24 hours, it was like 1979 again with lines of cars waiting patiently (or not so patiently) to fill up.

But just at that Hess station.

Down the street, the Exxon station was all but empty. Same thing at Shell. Valero too.

Before long, other Hess stations followed suit.

It was about this time that the Attorney General stepped in saying that it was illegal for Hess to be charging customers more for using credit.

In response, Hess argued that they weren’t charging more for those using credit. Rather, they were discounting the price for customers paying cash.

Wow, how’d the lawmakers miss THAT loop hole? Apparently, they did…

So, a few weeks ago on my way home from work, I had to fill up. The Hess station closest to my house is right next door to a Citgo — they practically share a parking lot — but they had a difference of 15-cents for the price of a gallon.

As I’ve said before, I’m not one to price-shop for gas. I’ll go where ever is the most convenient, but as these two stations are right next door to one another, well, I pulled up to the pump at Hess.

I unscrewed my gas cap, turned around to face the pump, dug out my wallet and only then remembered that I don’t usually carry cash. Oh well, I thought, I’ll just charge it.

Turns out, I couldn’t. They had duct tape over the card reader. I looked at the other seven pumps. They had duct tape too.

Then I saw the handwritten note on the pumps, “Prices are for cash only. Sorry, no debit or credit.”

Wow.

I pulled through and filled up at Citgo. On credit. Using pay-at-the-pump.

The next time I had to fill up I bypassed Hess and went straight to Citgo. Their price was now competitive with the Hess next door but guess what?

They’d taped over their card readers too. “Cash only.”

What the hell?

So I come to find out that it’s a technology issue.

Modern gas pumps aren’t able to dispense the same product for two different prices. In addition, most gas station signs aren’t large enough to display two prices (or technically, 8 prices for all of the different octane levels and diesel) like they used to be, so now some gas stations are just going “all cash”.

Thankfully, this issue only seems to become a problem near select Hess stations, but now that one Citgo has followed suit, the other Citgo across town is probably growing jealous. How long before they do the same thing?

Am I going to have to start carrying cash?

As I think I’ve said before here on PIAC, I’ve only paid cash for gas once in my life. Once. And that was also the only time I’ve ever been inside a gas station after filling up.

No, I’m not that young, but I was fortunate to have grown up in a town where Mobil test marketed “Pay-at-the-Pump” and even a very early version of the SpeedPass. With my mother’s credit card in hand, it was often my job to fill up the family minivan. I never had to venture inside. Not once.

But now, well, I just might be forced to fall victim to all of that eye catching cigarette advertising inside!!! Oh my!

Sometimes it feels like we’re going backwards technologically.

But really, I guess what upsets me the most about a two-tier price structure is that it’s going to make the average (ignorant) consumer think that MasterCard and VISA are to blame for high gas prices and, well, that couldn’t be farther from the truth…

Posted on July 25th, 2008 at 5:14 am by Brainy Smurf
Current Events, Cutting Costs | 1 Comment »

Intriguing Credit Card Offer: The 0% Offer Makes a Return

I’ve been looking over all of the credit card offers that have been coming in the mail for the past few weeks with a fine tooth comb to possibly use to finance reaching the magic 78% number on my mortgage balance (to eliminate PMI) sooner rather than later.

None have really peaked my interest since that first mailing a few weeks ago from Chase that I noticed offering 0% until April 2009, along with a 3% transaction fee capped at $199.

In fact, none have really come close. A few 1.99% offers until paid in full from Bank of America, which isn’t bad, but nothing lower than that. Citi’s recent offers have been terrible, just terrible, like their rewards.

This morning, though, I logged into my Chase account and scoped out their current “Balance Transfer Offers” and here’s what it displayed:

No explanation of the attached fees — those will likely be displayed only after I select an offer.

Either way, it will likely be the standard 3% with a cap of $199 so that’s what I’ll base my assumptions on.

The duplicated 0% for 12 months offers are obviously more attractive than the April 2009 offer that I received in the mail.

This is also the first time in a long time that I’ve noticed a 0% offer lasting for more than 3-4 billing cycles.

I’m also seeing another additional bonus to this offer — that it’s from Chase.

Unlike CitiBank, Chase allows you to make as many payments per billing cycle as you like. At one point during my big debt paydown, my statement would list over 20 credits each month. That was very convenient. Any day that I had a few extra bucks, I could log in to my Chase account and make a payment.

With Citi, you’re allowed 4 payments per cycle. That would be fine for most, but it doesn’t work real well for me.

Bank of America isn’t great when it comes to making payments either. Even though my checking account is also with Bank of America, for whatever reason, when I make a payment to a Bank of America credit card, it takes a few days for the transaction to appear on the credit card balance.

Of course, on the other side of the transaction, they withdraw from my checking account immediately. Love that.

I’m very close to pulling the trigger.

Of course, though, I need to wait on a response from Countrywide to see if it’s even worth doing.

The entire idea hinges on their answer…

Posted on July 24th, 2008 at 7:25 am by Brainy Smurf
Credit Card, Finance | 2 Comments »

Customer Service, or Lack Thereof : Revisited

So apparently my second inquiry online with Countrywide regarding my Mortgage Insurance got some notice.

I received a reply! I received a reply! And it only took a few hours! How about that?

Here’s my original inquiry from July 16 that they never responded to:

Hello!

I’m wondering if my PMI will be dropped automatically when my Loan to Value percentage reaches 78%.

I recently broke the 80% threshold and requested that PMI be cancelled, but received a letter asking for me to pay for an appraisal to make that happen. I didn’t find that an acceptable offer so now I plan to hit the 78% mark.

The law states that once the 78% mark is reached, the mortgage company is required to cancel PMI and I just wanted to make certain and verify that that is the case — without me having to schedule an appraisal or spend additional money out of pocket to make it happen.

Thanks very much!

Never got a response. So yesterday, as detailed here, I tried again:

Just thought I’d try this again since it’s been more than 1-2 business days and I haven’t yet received a response.

I’m wondering if my PMI will be dropped automatically when my Loan to Value percentage reaches 78%.

I recently broke the 80% threshold and requested that PMI be cancelled, but received a letter asking for me to pay for an appraisal to make that happen. I didn’t find that an acceptable offer so now I plan to hit the 78% mark.

The law states that once the 78% mark is reached, the mortgage company is required to cancel PMI and I just wanted to make certain and verify that that is the case — without me having to schedule an appraisal or spend additional money out of pocket to make it happen.

Thanks very much!

A couple of hours pass, and wham, they respond with:

Posted 07/22/2008

Reply : Dear Brainy Smurf:

Thank you for your recent Internet inquiry addressed to the Customer Service Department.

As per our records a PMI deletion letter has been mailed to you on July 09, 2008 asking for the Certificate of Value to confirm Market Value and LTV Ratio. You are requested to either fax or mail the appraisal report for further research.

You can fax the Certificate of Value at (805) 520-5019 or mail it to:

Address:
Countrywide Home Loans
SV-314B
P.O. Box 5170
Simi Valley, CA 93062-5170

Thank you for communicating with us electronically; we appreciate the opportunity to be of assistance.

OMFG! Thank you, Captain Obvious…

Yep, that is true that I requested PMI deletion on July 9.

See, the thing is, I KNEW THAT ALREADY!

I even went so far to predict that this was going to be a long drawn out hassle.

So, I respond with:

Hello again!

The response I received today didn’t actually answer my question — just stated what I already knew. I am fully aware that I requested PMI deletion on July 9 when I reached the 80% threshold.

The PMI deletion letter arrived and asked that I schedule and pay for an appraisal of my home. To me, this was unacceptable, so I will not be taking that route. More hassle than it’s worth — even though $130 is a very reasonable fee for an appraisal.

My question now regards whether or not the PMI will be dropped when I reach the 78% LTV ratio. As I understand it, at that point, the law requires that the PMI be dropped based 100% on the original value of the home — NOT the current market value, which is obviously higher anyway — I just don’t want to pay any extra to prove it.

I’m asking now if that is indeed the case — when my mortgage balance dips below $109980, will the PMI will be dropped without any appraisal fee required?

Thanks much!

Seems pretty simple, right? Just looking for a yes or no answer. Right?

Overnight, they responded (I’m now impressed with their response time — though it took them awhile to get going…)

Posted 07/22/2008

Reply : Dear Brainy Smurf:

Thank you for your recent Internet inquiry addressed to the Customer Service Department.

Our records indicate that we have requested the escrow review department to mail you the list of requirements if it is eligible for PMI deletion. Please allow 7-10 business days for receipt. If you should require any additional assistance, please contact our PMI Department at (800) 669-9092.

Thank you for communicating with us electronically, we appreciate the opportunity to be of assistance.

So much for a simple yes or no answer… This is like a Presidential debate. They totally dodged my question. Sheesh…

I’m all but certain that this apparently too-confidential-to-have-online “list of requirements” that they’re mailing me *still* won’t answer my question simple yes/no question.

In fact, I’d bet it’s the exact same letter they mailed me back on July 9.

Looks like I’ll be camping out at the mailbox waiting, again, for Countrywide to respond (and swindle another $85.15 from my account).

Sigh…

(Oh, some may wonder why I don’t just pick up the phone and ask a customer service rep… Reason is, I want this in writing, or email, or online on THEIR message center. In the past, this has saved me a lot of trouble when it comes to billing disputes. Playing he-said/she-said has *never* gotten me far. And if I do pursue this all the way up to a complaint with FTC, I want all of Countrywide’s claims in writing.)

Posted on July 23rd, 2008 at 7:48 am by Brainy Smurf
PMI - Mortgage Insurance, Rants | 3 Comments »