Red Zone Finances

Sometimes I find myself going into a sort of “kill mode” when it comes to debt.

You know, when you stray from the steady payment plan and just recklessly throw every last penny at one specific balance…

Know what I’m talking about?

For me, that happens every time a balance falls below $4k. And when that happens, well, it’s game time.

I have quite a bit of experience at this sort of thing. Not something to be proud of, really… I mean, who wants to brag about having carried many, many, many $4k+ balances in recent years? (Me.)

But the one thing that it has is exposed is a debt repayment pattern of mine:

An old MBNA credit card’s balance fell to $3563 back in May of 2006 and two months later, it was gone.

My Bank of America credit card’s balance fell to $3267 in December of 2006. By January 2007, it was gone.

More recently, my Citi credit card balance was $4500 in December 2007. I wiped it out in January 2008. Wow.

And my last remaining credit card debt, the Chase account… Well, in February it had a balance of $3518. But by the April statement, it was holding steady at $0.

See what I mean?

But the last few months have been sort of ho-hum for me on the debt re-payment front. Things are moving, yes, but they’re not very exciting…

I thought I was making great strides in the past few weeks in my quest to eliminate PMI by knocking off an extra $6000 off of my mortgage balance over the year, only to find out that I need to knock off another $2500. And even that might not do it. Not happy about it.

But in the meantime, my auto loan balance has snuck through the $4k’s and now sits with a balance of $3986.

You know what that means?

Time for the red zone offense to take the field.

Yep, two months or less until Toyota mails me the title.

This is my red zone.

(Yeah, yeah… I know this is the wrong time of year to make football references… Go Bears!)

Posted on July 16th, 2008 at 7:43 am by Brainy Smurf
Finance, Credit Card, Success, 2008 Goals | 3 Comments »

Reaching the Automatic PMI Cancellation Mark

According to the Federal Trade Commission, Private Mortgage Insurance (PMI) must be terminated automatically by the mortgage company when the borrower reaches 22 percent equity in the home based on the original property value — most often, the purchase price.

In my instance, the purchase price of my home was $141k. A bargain, really. Even back in 2002.

As of this morning, the remaining balance is $112,535.99. That works out to 20.187% equity based on the original property value.

To reach the 22% mark, I need to pay down an additional $2,555.99 in principle — preferably before October of this year when the mortgage company re-evaluates my escrow account (where the PMI payment is drawn from) and re-calculates my monthly mortgage payment for the following year.

If this is the first post you’ve read of mine on the subject of PMI cancellation, you may want to take a look at this earlier post where I was, in my opinion, wrongfully denied cancellation by Countrywide.

I plan to do this as soon as possible and am currently evaluating various promotional credit card offers I’ve received in the mail to be able to make the additional payment as soon at this week.

The most attractive offer so far is from Chase Bank. It’s 0% until April of 2009 with a 3% transaction fee capped at $199. In this scenario, I’d write a check to myself for $2555 and be charged with a $76.65 transaction fee (3 percent).

My new balance with Chase would be $2631.65 at 0% for 8 months. That works out to around a minimum of $330 per month to pay it off before any finance charges come along. That wouldn’t be a problem.

If this plan were successful, it would prevent paying $85.15 in PMI charges for at least 4 months (possibly more), a $130 appraisal fee, and loads of difficult to calculate interest.

So, for a cost of $76.65, I could save an absolute minimum of $470.60.

Sounds like a good plan.

Before any of this happens though, I first need to get in contact with Countrywide and ensure that reaching the 22% mark will indeed automatically cancel PMI without any additional effort (or $130 appraisals) from me.

My interpretation of the law (and I read it like 50 times over) indicates that automatic cancellation at 22% has nothing to do with an increase or decrease in the value of the home, only with how much the mortgage is paid down. I have my doubts, but we’ll see…

(In all actuality, my wife will probably make the confrontational phone call. She’s *way* better at that sort of thing than I am. That’s why I married her!)

Worst case, I knock off a lot more principle, save a bunch of money, file a complaint with the FTC, and then see where that takes me…

Posted on July 15th, 2008 at 1:13 pm by Brainy Smurf
Rants, Finance, Mortgage, Credit Card, 2008 Goals, PMI - Mortgage Insurance | 4 Comments »

FTC Bait? My Own Mortgage Crisis…

I knew it.

I knew it!

I knew that canceling PMI wasn’t going to be easy. I just knew it.

And I’m pissed.

Here’s the letter I received from Countrywide’s Mortgage Insurance Department yesterday:

IMPORTANT MESSAGE ABOUT YOUR LOAN

Thank you for your recent inquiry about deleting the mortgage insurance on your Countrywide home loan. Your loan must meet current mortgage insurance cancellation requirements for this to occur. Please allow us to explain what this involves.

———————————-

WHAT THIS MEANS

The current value of your property must be equal to or greater than the original value of your property at the time the loan closed for the PMI to be deleted. The original value of your property means the lesser of the sales price or the appraised value at the closing of a purchase loan, and the appraised value at the closing of a refinance loan. A Certificate of Value (COV) is required to determine if the current value of your property is sufficient to meet this requirement. Your noteholder requires Countrywide Home Loans to select your COV provider. You will be responsible for the cost of the COV. Before you send a check or call to provide credit card information for you COV, we would suggest that you try to verify that the value of your property meet the above mentioned criteria.

———————————-

WHAT YOU NEED TO DO

If you choose to continue with the COV ordering process, simply complete the form at the bottom of this letter and return it with a check made payable to Landsafe Appraisal Services for $130.00. You must reference your loan number and write “COV Fee” on the check. Please do not include the COV fee along with your regular monthly payment. It must be sent separately.

Landsafe w ill [sic] contract a local Broker or Realtor to perform the COV, which will include an interior inspection and photographs. The Broker or Realtor should identify himself or herself and indicate that he or she was contracted by Landsafe. If he or she fails to do so, please ask. Our department will then review the COV and if it is determined that it adequately supports at least the original value of the property, your request will be approved. The insurance will be cancelled and your payment adjusted accordingly.

———————————-

IMPORTANT INFORMATION

Because of your timely payment record, we are able to consider your request; however, please keep in mind that any late payment may prevent cancellation.

If you do not take action within 60 days, please contact us at (800) 669-6607 to confirm your continued eligibility.

We look forward to receiving you COV soon so that we can take care of this matter for you.

Requirements are subject to change.

This letter supersedes any previous information that may have been provided to you.

So, basically, they want me to pay them $130 even though I’ve met the criteria required to cancel PMI. I get it.

“This letter supersedes any previous information that may have been provided to you.”

Yep, it must.

I understand that the housing market is down and that mortgage companies like Countrywide are struggling but it was pretty clear (even on Countrywide’s website) that PMI cancellation could be requested at the 20% mark based entirely on the original value of the home. I’m past that mark.

While $130 really isn’t that much — my wife says it’s a great deal — the idea of paying them more to tell me that my house is worth more than it was 6 years ago doesn’t sit well with me.

Neither does taking time off of work to have a realtor come over and tour my house with a camera. The Fair Plan insurance inspections I’ve been subjected to are more than enough… Yeah, maybe I have privacy issues, but it’s really not cool to be forced to let strangers (essentially un-invited) poke their heads into your closets. And then demand money.

Heading over to the Federal Trade Commission’s website, on the subject of Private Mortgage Insurance they state:

For home mortgages signed on or after July 29, 1999, your PMI must - with certain exceptions - be terminated automatically when you reach 22 percent equity in your home based on the original property value, if your mortgage payments are current. Your PMI also can be canceled, when you request - with certain exceptions - when you reach 20 percent equity in your home based on the original property value, if your mortgage payments are current.

One exception is if your loan is “high-risk.” Another is if you have not been current on your payments within the year prior to the time for termination or cancellation. A third is if you have other liens on your property. For these loans, your PMI may continue. Ask your lender or mortgage servicer (a company that collects your payments) for more information about these requirements.

None of those exceptions apply to my loan. Not one.

My mortgage was signed after July 29, 1999. It’s not high risk, it’s current, and there are no liens on my property. No re-fi’s, no HELOC’s… Nothing…

Perhaps I should file a complaint with the FTC? That would probably be an even bigger hassle. You’d think that what the FTC says would “supersede” anything Countrywide says about the matter… You’d think…

But now I’m wondering if Countrywide will drop PMI without question at the 22% mark — where it’s supposed to drop automatically. While I’d prefer not to send the additional funds towards the mortgage right now, that mark is just around $2500 away. Do-able.

But if, at the 22% mark, they still come back with this exact same form letter, well, I guess I’m not sure what I’ll do then, but filing a complaint with the FTC will definitely look more attractive.

Posted on July 15th, 2008 at 8:11 am by Brainy Smurf
Rants, Finance, Insurance, Mortgage, 2008 Goals, PMI - Mortgage Insurance | No Comments »

Try Living on 50% of Your Income

After reading about so many people super-saving their way to wealth by living off of 50% or less of their total income, my wife and I have been toying with the idea of giving it a try ourselves.

For a month.

Not this month, mind you. Definitely not happening this month.

I spent a few minutes running the numbers this morning and it seems that people run them differently. Some use their gross pay as a starting point. Some use their net pay. Some just use what seems like an arbitrary estimate of sorts.

For me, I’m going to use my bi-weekly take home paycheck amount plus my 401k contributions all multiplied by 26 (the number of paychecks per year) and then divided by 12 to give me a nice monthly starting point for my income.

This is my way of pretending that taxes don’t exist while pseudo-padding the numbers in my favor by making my income less than it actually is.

For instance, technically, I contribute 15% of my income towards my 401k. But using this calculation (which omits federal taxes, state taxes, and health benefits), I contribute 19.86% towards my 401k.

Make sense?

Basically, all I’m doing is using my actual take home pay for my calculations. Plus my 401k contributions. This is sounding a lot more complicated than it needs to…

Anyhow, after some “quality time” with my 99-cent calculator, the numbers look like this:

Savings (50% total)
19.86% - 401k
30.14% - Unaccounted For

Expenses (50% total)
24.95% - Mortgage (Minimum Payment)
11.36% - Auto/Insurance/Gas (Minimum Payments + Gas)
 9.34% - Utilities
 4.35% - Unaccounted For

I found these numbers shocking.

Each month, I feel like my checking account balance is pretty stagnant. And I’m supposed to have like 35% of my paycheck available? Really? No way.

But upon closer inspection, it actually does seem to jive. For the past few years, I’ve been sending all of that “unaccounted for” money towards debt — credit card, auto loan, and mortgage. It adds up pretty close.

So, essentially, I already have been living at the 50% level. All along…this whole time.

I’m just not seeing the wealth yet because I’m still carrying debt, so one thing at a time… Scratch the 50% idea for August and wipe out the $4000 left on the auto loan first.

I’ll revisit this idea again in a few months when, hopefully, I’m debt free…

Posted on July 14th, 2008 at 9:59 am by Brainy Smurf
Finance, Savings | No Comments »

Fleeced by Credit Card Foreign Transaction Fees

Last month, I used my AT&T Universal credit card from Citi to buy some CFL football tickets online — the only available option from 500 miles away. It was a game that we were going to attend while on vacation.

Back when I bought them, I bemoaned all of TicketMaster’s surcharges that I was forced to pay. Something about “convenience”…

Little did I know that my credit card company would take a slice as well… just a few weeks after the fact.

Upon returning home from our vacation, I noticed that my credit card was carrying a balance. A nice and even $5.00 balance. Not something that I expected, so I logged in to see the details:

A foreign transaction fee. Okay, whatever. It’s just five bucks, right? Not that big of a deal. But buried in the fine print (yes, the fine print even exists on a computer screen), I came across this:

Your Card provides the convenience of transacting in foreign currencies worldwide wherever MasterCard is accepted without having to exchange and carry more foreign currency than you need for your transaction. Each purchase you make in a foreign currency is subject to a one-time transaction fee. The Annual Percentage Rate for Standard Purchases shown on this statement applies only to purchases made in a foreign currency.

There’s that magic word again: convenience.

I’m sorry, but if a vendor lists that Visa or MasterCard are accepted at their establishment, the consumer shouldn’t be paying any additional fee on their purchases.

Now, again, why am I making such a fuss about one $5 transaction fee? Well, because I used the card SIX more times while in Canada after this last statement came out.

My understanding of the line “each purchase you make in a foreign currency is subject to a one-time transaction fee” means that I’m going to get hit with another $30 in unexpected fees at the end of this month.

That’s a lot of money for “convenience”, don’t you think?

Now I realize that I used a MasterCard in this instance, but I looked up the terms and conditions on my Visa card through Bank of America, and they appear to be the same. Wouldn’t have mattered which card I chose.

Of course, neither discloses what the exact “convenience” fee will actually be in the fine print. Depends on the weather, I guess.

But in Visa’s case, I have a bit more of a problem with the whole idea of foreign transaction fees — especially in countries that they currently operate in and have operated in for years!?

(I target Visa here because I can’t recall a widespread MasterCard advertising campaign that involves non-domestic transactions.)

See, of late, you can’t watch more than 20 minutes of NBC programming without viewing a Visa commercial where they tout themselves as an official sponsor of next month’s Olympic Games in Beijing.

Going to their website, they boast:

Visa-branded ATMs have been installed in and around Beijing for your convenience.

As a Worldwide Partner, Visa is the only card accepted at any Olympic venue throughout China and for Olympic merchandise purchased online, in Olympic retail stores and by catalog.

Wow. There’s that word again. Convenience.

Odd how they “conveniently” fail to mention that if you use one of those Visa-branded ATMs in Beijing, you’re going to get dinged with an extra fee — from them and probably your bank back home too if you have a linked debit/credit account.

Convenient.

Posted on July 11th, 2008 at 12:41 pm by Brainy Smurf
Rants, Finance, Credit Card | No Comments »

Wouldn’t you know it…

Just days after requesting that the private mortgage insurance from my mortgage be removed, I see that they’ve taken another $85.15 from my escrow account to pay, well, for the private mortgage insurance I shouldn’t have be paying for anymore.

Not that I didn’t expect that to happen — Countrywide did give themselves 3 weeks to “research” the request.

In fact, I’d bet that I even end up paying it yet again in August.

Sure, August 10th is more than 3 weeks in the future, but just you wait…

Posted on July 11th, 2008 at 8:09 am by Brainy Smurf
Rants, Finance, Mortgage, PMI - Mortgage Insurance | No Comments »

Personal Property Taxes Are (were?) Due

Well, it’s that time of year again. Yep — tax time.

That is, if you live in one of the states that has a personal property tax.

Here in Connecticut, we have to pay local property taxes on our automobiles. We used to be pretty unique in that respect but now roughly half of the country has a similar tax.

Each year, the personal property tax is due on July 1st. The city mailed the bills out on July 3rd.

So, by the time we received the bill, after the Independence Day holiday, we were already 5 days late. Hmph!

Maybe it’s just me, but I just can’t understand how municipalities can get away with stuff like that… Granted, they don’t start charging interest until you’re a month overdue, but still…

Even worse, looking at the bill — they don’t have a due date printed anywhere. Seriously. Just a threatening paragraph about not being able to register your vehicle in the future if your paid taxes aren’t current. No return envelope either. And you can’t pay online.

Not very convenient.

I can’t remember the last time I actually addressed a blank envelope.

Probably about this time last July.

Anyway, this year the tax due on my two vehicles totals $427.54.

I’m pretty happy about that. Much less than I’d expected and far less than just last year.

I was prepared, actually, for an increase back in April when I’d read that, “Most homeowners will see a property tax hike of at least $150 this year if the proposed budget eyed by the city’s Board of Finance is approved.”

That proposed budget was approved, but upon re-reading the article, it (the budget) didn’t go into effect until this month so the tax hike will actually hit us on next year’s bill.

For fun, I went back and dug up all of my previous personal property tax bills. Okay, not all of them, but as far back as I still had the stubs on file — back to 2001 — and I was surprised by what I found:

Turns out, I had much reason to be pleasantly surprised by this year’s bill. It’s the least I’ve ever had to pay. A full $200+ less than last year! Fantastic!

Don’t get me wrong though… Not for one second am I saying that getting a $400+ bill in the dead of summer is anything to be jumping for joy about.

It’s not.

But July just so happens to be one of those mystical 3 paycheck months for me, so paring an additional $400 from the budget isn’t anything to worry about.

And how on earth was I able to pay a $701 tax bill back in 2002? Yikes!

Posted on July 10th, 2008 at 2:04 pm by Brainy Smurf
Finance, Current Events, Taxes | 1 Comment »

PMI Eliminated

Well…sort of.

I made the big move yesterday afternoon and made an extra payment of $900 to Countrywide that put my current loan to value percentage at 79.998 percent.

Yes, that’s less than $3 over the mark but they can’t deny that it is, infact, over the mark.

Then I submitted a request to have the mortgage insurance removed.

The automated response:

The research request has been submitted for review. Please allow up to 3 weeks for research to be completed. When the research has been completed, a letter will be sent to the address of record containing the results. Once you receive the letter, should you have any additional questions, please use the contact information provided in the letter.

Three weeks? Sheesh. I dunno, seems like something a computer could do. I could even write the program for them to check their database of customers.

So I guess I’m in a bit of a foggy period. That’s okay, I’ll stay the course with the mortgage as the top priority until the letter arrives.

I’m a bit of a pessimist, so I’m not really expecting a favorable result. Somehow I can just see the letter saying that my loan isn’t old enough (70 months) or that I’m too close to the 80% mark and they won’t drop it until I hit 78% mark.

Even worse, they’ll pull out a recent headline as an excuse and say it can’t be dropped because the value of the property has dropped in recent months. Or ask me to pay for an appraisal. Ugh…

I’ve read that mortgage companies have to legally cancel PMI at 78%. Seems a little crooked to me. Why is it not 80%? Oh, so someone out there can line their pockets for a few extra years… I get it.

Anyway, I’ve got my fingers crossed!

Posted on July 9th, 2008 at 5:57 am by Brainy Smurf
Finance, Mortgage, Success, 2008 Goals, PMI - Mortgage Insurance | 2 Comments »