Browsing Category: "Controversial Topics"
Negative amortization (NegAm) loans actually exist
Just when I thought interest only loans were bad I find out about negative amortization loans. Can you believe reputable financial institutions such as banks and mortgage lenders actually allow such a product. A mortgage that actually increases instead of decreases as you pay the payment. Sure you can believe that, it’s a much better deal for the mortgage lender.
A negative amortization loan is a type of loan where the payment on the loan is less than the monthly interest charge. This causes the balance on the loan to actually increase each month instead of decrease. These types of loans are also referred to as a deferred interest or graduated payment mortgage. Most lenders will only allow the negative amortization period to last less than 5 years at which point the loan switches to a normal amortization schedule and the payment increases or the loan must be paid in full or refinanced.
Before you decide to take out a loan on a house do a major budget analysis. If you can’t afford to buy the house, don’t try to work out some creative way to purchase a house you really can’t afford!
Is moving worth saving education costs?
Alright all you financial gurus here is the question of the day. Currently my wife works in a school system in a different county than we live. We live right on the border but if we want our kids to go to school with my wife then we have to pay out of district tuition for our kids to go to a public school. We would get a discounted rate but it would still be $1,800 per year or about $150 per month to send one child there.
We have two children ages 3 and 3 months so we are looking at 12 years of public education for each of our children. So you see the decision I’m face with. At first thought it doesn’t seem to be worth the trouble and moving expenses to pack up our bags and move to another county, but after doing some quick math I realize I have to think deeper about the decision.
If we stay were we are at and start paying the tuition costs in a couple of years we will spend a total of about $43,000 in education costs over the course of their public education. Sounds like a lot of money to me, but wait it gets even bigger.
Let’s assume we decide to move and avoid the tuition costs. I’m going to assume we make a small profit on our current home (should be easy to do) and move into a similar priced home. We would finance about $210,000 over a 30 year fixed rate mortgage at 6.5%. The payment would be about $1,325 per month. Since we would be paying the $150 per month to tuition I’m going to apply that money to our mortgage payment as extra principal payments for five years, this is when my second child would start school so that amount would double to $300 per month. The $300 would continue until my 1st daughter graduates high school and then $150 extra would be applied until my 2nd daughter graduates. Doing this math I would pay off my house 8 and 1/2 years sooner and save just over $92,000. I would of course have to subtract closing costs and moving costs from the profit so about $8,000. After this I would still save over $84,000 from the move?
Sounds tempting to me but I would like to hear your opinions.
Rent to Own - They Own YOU!
I did a little research about the rent to own business. Today there was a special featured on the sales page of Colortyme for a 42″ HDTV as low as $29.99 per week for 117 weeks. Alright can you do the math? The funny part is they actually do the math for you on the same sale page and people still do this stuff!!!
Beating the credit card companies
Can you beat the credit card companies at their own game?
Yesterday I read another blog about a guy who owes thousands of dollars to credit card companies, however he also has thousands of dollars in the bank. He could pay off the credit card balances, but instead he keeps the money in the bank to collect interest, Why? Because most of the credit card balances carry a 0% interest rate. Can you really come out ahead in this game?
Analyzing a famous money quote
Analyzing a famous money quote
According to the Random House Dictionary of Proverbs and Sayings, the phrase “Money is the root of all evil” first appeared in English circa 1000 A.D. The saying originated in the New Testament. “For the love of money is the root of all evil.” Timothy, 6:10. Samuel Butler has also been credited with saying “The want of money is the root of all evil.” The two quotes basically share the same meaning, but are they true? Is money really the root of all evil?
Dave Ramsey, the real deal?
Dave Ramsey, the real deal?
Dave Ramsey is the famous voice of radio, TV, and stage who talks about financial matters and teaches us the steps to a debt free life, creating a budget, building wealth, planning for retirement, and finally giving to others. He is a great motivational speaker and all of his principals are built around Biblical teachings. The Dave Ramsey plan sounds great but is he the real deal? Does he really care so much about his loyal listeners or has he just formulated a creative plan for his own financial gain?
Keep mortgage and Invest?
Keep mortgage and Invest?
Here is a topic that I’ve talked to many people about and get very mixed opinions on what is the best choice. Should you keep your current mortgage and only pay the minimum payment, putting any extra money you have into investments? Or should you pay all extra money toward the principal of your mortgage and then invest heavily when the mortgage is paid off?
When should you teach your children about money?
When should you teach your children about money?
Many wonder at what age is it appropriate to start teaching your children about money? When can the understand the concept of money and finances? Some may disagree with this but I think you can start teaching a child as early as three.
Cash Advance or Pay Day Loans Rip Offs!
Cash Advance or Pay Day Loans Rip Offs!
Hopefully no one reading this has taken part in this type of “loan”. Cash advance or pay day loan businesses are the biggest ripoffs in the industry and in my opinion should be banned from business! First off only lower income families will take part in this scam which means the rich is only taking advantage of the poor. Let’s take a look at how they work and the evil practices they take part in.
Refinance Your Home Loan to Pay for Car?
Refinance Your Home Loan to Pay for Car?
Should you refinance your existing home loan to pay for your car loan? When you first think about the logic it doesn’t sound like a financially smart choice to make, but after doing some math could you actually save some money? Let’s start with some sample numbers and see what the crazy world of math tells us….
