Mistakes

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My house is protected by PMI!The more I think about it, the more I want to focus on paying down the mortgage.

When I paid off the last of my credit card debt, the house just happened to become the top priority. Not for any real reason other than the fact that I already had an automatic payment plan in place. With the extra money around, I just increased the size of my payments.

After around a month, though, I realized that it wasn’t exactly the wisest path to take. I switched things up and started paying down my auto loan instead. I also increased my savings rate.

But now, I’m starting to lean back towards the mortgage again…

Yes, all of this flip-flopping in just 2 months time. I should run for office.

I haven’t put anything into place just yet, but while going through my records, I noticed that my mortgage holder (CountryWide) does their escrow analysis on my account each year somewhere between October and November. For the past 4 years, anyway, it’s been one of those two months.

Now, my whole point of paying down the mortgage quickly is to eliminate the monthly PMI that I’m paying out of that escrow account.

Private Mortgage Insurance (PMI) – PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home’s value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.

PMI plays an important role in the mortgage industry by protecting a lender against loss if a borrower defaults on a loan and by enabling borrowers with less cash to have greater access to homeownership. With this type of insurance, it is possible for you to buy a home with as little as a 3 percent to 5 percent down payment. This means that you can buy a home sooner without waiting years to accumulate a large down payment.

Under HPA, you have the right to request cancellation of PMI when you pay down your mortgage to the point that it equals 80 percent of the original purchase price or appraised value of your home at the time the loan was obtained, whichever is less. You also need a good payment history, meaning that you have not been 30 days late with your mortgage payment within a year of your request, or 60 days late within two years. Your lender may require evidence that the value of the property has not declined below its original value and that the property does not have a second mortgage, such as a home equity loan.

Eliminating the PMI from my mortgage bill would essentially ensure that an additional $85.15 would go towards principle each month. (Technically, my minimum mortgage payment would go down after the analysis, but I’d continue to send in the same amount on my own — resulting in the $85.15 per month increase.)

That sounds like a good thing, right?

Well, considering that my regular payment applies less than $300 towards principle each month, an additional $85.15 is like increasing my payment by over 25% — and that’s without sending them an additional dime. That makes it very attractive.

As of today, I have $1901 more to knock off the principle before I can safely request that they remove the PMI from the calculation.

To be safe, I think I should press to reach that goal by September, at the latest, to ensure that I get there before they kick off their analysis procedure.

(I’m aware that I can request that PMI be removed any time after I reach the 20% level, but the escrow analysis locks in my monthly payment for an entire year. If I don’t make it by the upcoming analysis, what was going towards the PMI will just sit in the escrow account and result in an escrow overage. In that case, they’ll send me a check of the difference in November of 2009 after the next analysis — not exactly ideal which is why I’m trying to avoid the scenario all together.)

So, with most of my income for June likely being sucked up by our upcoming vacation, I’m thinking that, to be safe, I’ll have to send around $2000 extra towards the principle spread accross July, August, and the first few weeks of September.

That’s a definite possibility if I scale back the current plan of $1000 towards the car and $1000 towards savings each month.

Actually, if I were feeling really daring, I’d just take the $2000 I have in savings right now and send it right to Countrywide and call it a day (or year?)… Nah, not feeling it…

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Killer Shopping CartThat’s right. I went back to my old ways this past weekend.

I blew through $1015.88 from Friday to Sunday — and I used a credit card to finance it all.

Things got off to a great start — I planned to finally clean out the basement this weekend, and along with some help from a 1 gallon jug of Mr. Clean, the basement (as well as the house) smells lemony-fresh inside.

Quite an improvement from the sewage odor we’d been, ahem, dealing with for the past couple of months.

And then came the spending binge…

Friday morning, I blew $111 on Tickets.com for some tickets to a show my wife and I are planning to attend while we’re on vacation. Eh, not too bad…

After work, my wife and I went to our nearest strip of big box stores — BestBuy, Circuit City, and Sam’s Club. Now, we’d planned to “stimulate the economy” by picking up a computer for my wife, and that’s just what we did…

We selected the Compaq AMD Athlon SR5421F at Sam’s Club which set us back $399.

Every CPU I’ve ever purchased has been Intel-based, so this was my first foray into the competitors market. I’ve also never been a fan of Compaq, but now that they’re one with Hewlett-Packard, well, how bad can it be, right?

It is a Vista machine, it has enough RAM to run properly, and best of all, the price was right. I couldn’t justify spending twice that on a machine that would probably work just the same… After getting it all set-up, I just might go back and replace my current machine as well.

Odd, after nearly a decade of spending in excess $1500 per CPU, I’m now happy with the $399 version…from, well, basically Walmart. Right now, her PC easily blows the rest of our computers out of the water — performance-wise. The hard drive is a little light, but we’ve got an external RAID on our home network to make up for any shortcomings.

In addition to the computer, who can go to Sam’s and not add a few “extras” to the cart? Total bill at Sam’s Club was $472.85. Ouch.

While at all three stores, we also priced out the little GPS units you see in so many people’s cars these days. The TomTom, the Garmin, and the Magellan. I don’t really want one of these because I somewhat enjoy getting lost, but at the same time, with our big vacation coming up (and my wife’s iffy map-reading skills), I thought it might be a good idea to pick one up.

Not really so much for the directions (the main feature of the device), but more for the little “Points of Interest” they list along the routes chosen.

Some of the most memorable things we’ve done on vacation have been at roadside attractions — this vacation, I don’t want to stumble upon them by accident — I’d rather hit them on purpose.

So after playing with them all at the store on Friday night, and writing down some prices, I did some research on them on Saturday. I was set on the Garmin models. They won out over the TomTom models because they included Canada in their built-in maps. The Magellan models were far too expensive for me.

The two models I was comparing were the Garmin Nuvi 260 and the Garmin Nuvi 350. The Nuvi 350 model cost a fraction more, and boasted lots of additional features — mainly being able to play mp3’s, give traffic advice (for an additional monthly fee), and it was also bluetooth enabled.

Okay, three things I have absolutely zero interest in or use for. The decision was made. I was going to purchase the Garmin Nuvi 260 for $221.49 from Amazon.

Now, just like any other wireless electronic, they nail you with having to purchase a lot of extras. Added to the unit, I bought a dashboard friction mount so I don’t have to use the ugly suction cup thing in the car.

In addition, and since I was spending money like it was going out of style, I upgraded our version of Microsoft Office to load on to my wife’s new computer. The Home & Student Version set me back an additional $97.99.

Saturday night, my wife wasn’t feeling well and asked me to go to the grocery store. It was a tough mission since I usually don’t do much other than look at people when in the grocery store.

The list included Gatorade, CocaCola, and cherries. Total damage was $18.51. I charged it because I don’t carry cash. D’oh?!

To finish off the weekend, on Sunday, I won an eBay auction for a game worn hockey jersey. It was only $52.00, and the shipping was another $7. Not too bad, but still, after the huge expenditures of the previous days, I should have held back.

In the end, here’s what the weekend’s final tally looked like:

$ 111.00   Tickets to show - Tickets.com

$ 399.00   Compaq SR5421F - Sam's Club
$  25.39   Tide Detergent - Sam's Club
$  13.54   Kingsford Charcoal - Sam's Club
$   5.18   RealLemon Lemon Juice - Sam's Club
$   4.28   Cocktail Croissants - Sam's Club
$  25.46   Sales Tax - Sam's Club

$ 221.49   Garmin Nuvi 260 - Amazon.com
$  27.29   Garmin Friction Mount - Amazon.com
$  97.99   MS Office Home & Student - Amazon.com
$   7.75   Shipping - Amazon.com

$   8.27   Cherries - Stop & Shop
$   4.99   Orange Gatorade - Stop & Shop
$   4.99   Coca-Cola - Stop & Shop
$   0.26   Sales Tax - Stop & Shop

$  52.00   Game Worn Hockey Jersey - eBay.com
$   7.00   Shipping - eBay.com

$1015.88   TOTAL

On the bright side, though I went back and used a credit card, I did it wisely this time. I charged all of them on a card with rewards (ooooooh!) and at the perfect time of the month to give me nearly a 40-day grace period.

In the end, no worries, I’ll pay it off in full before any finance charges come my way, but this could certainly negatively impact this month’s net worth numbers.

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Adobe InDesign CS2Following the six hundred dollar Canon Fisheye purchase in January of 2007, another complete lapse of financial responsibility occurred a few weeks later.

My dumb purchase for February of 2007 was Adobe InDesign CS2 — the successor to Adobe PageMaker, a desktop publishing application. You want to make slick looking PDF files? InDesign is the program to use.

I foolishly purchased it for a website design project that I had already completed (and been paid in full for). The client came back and asked that I turn my design into a hardcopy format — not really understanding that a booklet/brochure and an animated dynamic website were two totally different mediums… As if the animation wasn’t a dead giveaway…

I agreed to do it — without additional payment as they seemed to think that was part of the original proposal (and I didn’t call them on it) — but first I needed the software…

To my credit, I didn’t pay the full price…which happened to be $699 at the time.

I knew I wasn’t going to use this software very much, hardcopy is *not* my specialty, so I went looking for a legitimate copy of it on eBay. In the past, I’ve had pretty decent luck purchasing software there. To date, nothing totally bootleg has come my way.

In the end, my copy of Adobe InDesign CS2 set me back $300.

Since finishing up that project, I’d say I’ve used the program maybe 5 times. Sure, it’s come in handy in a pinch, but certainly not anywhere near $300 worth of handiness.

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I’ve been bouncing around the idea of doing a monthly “dumbest purchase” post and I think I’m ready to get started, but first I’ll need to recap some of my bigger missteps from the past…

One of the neat things about keeping a detailed log of your expenses is that you can easily go back and identify the bonehead moves (and do your best not to repeat them).

If you don’t already use something like Microsoft Money or Quicken to track your finances, I really suggest picking one or the other up and then trying to get into the habit of actually using them — it will save you a lot of money when you start to visualize where your money is actually being spent.

Canon EF 15mm f/2.8 Fisheye Camera LensSo, without any more filler, and just to get things started, I’ll venture back into the records and start way back in January 2007.

The dumbest purchase of January 2007 was a Canon EF 15mm f/2.8 Fisheye Camera Lens.

A what?

A fisheye lens is basically a super wide angle lens. You know those greeting cards with the dogs on them? The kind where the dog’s nose is huge and it looks like their snout is really long? That’s the effect of a fisheye lens.

For a photographer, it’s strictly a specialty lens. You know, something you don’t *really* need, but still something that’s nice to have in your arsenal. It’s a great way to make your photos stand out from the rest, but you need to use it sparingly because the distortion can get really cheezy if overused.

About a year earlier, another photographer let me borrow his fisheye while we were shooting a concert. Having had no experience with that type of lens, my photos were terrible, but I saw the potential that it had.

I had to have one.

I scoured the reputable used photo listings for months with no luck. That’s the thing — even though the fisheye isn’t used very often, it really is nice to have one, so very few are selling on the secondary market, at least at a fair price.

In the midst of hockey season, and the hopes of getting a goal cam set-up, I finally ordered one online from B+H Photo in New York City. Including shipping, it set me back $596.50.

Yep, 600 clams for something I’d rarely find use for.

Fisheye Results — What I’d hoped for…Nearly a year and half later, I’d say I’ve shot maybe 100 frames with that lens. That may sound like a lot, but during the hockey season, we’d shoot a minimum of 2000 total frames per week. Basically, the fisheye isn’t a workhorse. And it’s a secondary lens — it was very rare that I’d actually use it.

Only one fisheye shot has been a “keeper”. Just one — a panoramic arena shot. Hardly exciting.

That was my dumbest purchase (and largest too!) of January 2007.

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