Let’s look at a “typical” mortgage. Right now, the average American mortgage is $235,000, so let’s use that as our baseline. The Seattle Times reports that, right now, the average 30 year fixed mortgage rate is 3.42%. So, let’s use those numbers. We’ll look at a 30 year fixed mortgage at 3.42% that borrows $235,000.
It’s a pretty common story. Boy (or girl) wants something. Boy discovers that there’s easy credit available. Boy convinces self that they can just pay the debt later. Boy buys that thing on credit. Boy gets more credit and buys more things. Boy starts realizing the bills and interest are drowning him. Boy decides to
Kim writes in: My dad told me that the best way to pay off a credit card is to pay it all off at once so I have been saving up the money to do that. My boyfriend argues with that saying that the best way to do it is to make the biggest possible
Here’s some food for thought for those of you out there raising children and hoping to teach them good lessons about money. I was at the store recently with my seven year old son. When it’s just the two of us, he’s very quiet and observant of what’s going on around him (he can be
Financial meltdowns often start with a small thing – the figurative straw that breaks the camel’s back. I’ve read stories from readers about the many small things that have caused them to start reassessing their lives. They had a credit card rejected at an inopportune moment. They didn’t have enough cash to pay for the
When Sarah and I were married in 2003, we had a fairly low-cost ceremony. We rented a local Knights of Columbus hall for the reception, utilized a lot of family help in the preparation, and the total bill was quite reasonable. The honeymoon, however, was a different story. We went to the United Kingdom for
Karen writes in: “I have an offer from a credit card company in which they pledge 0% interest for 15 months on a balance transfer. The way they seem to do that balance transfer is that I give them an amount and they send me a check which I then use to pay off a
Lately, I’ve seen many emails from readers asking me whether or not I think a particular debt is “okay” now that interest rates are so low. It’s true – collateralized debt for people with good credit histories has a very low interest rate right now. You can get car loans and home loans for stupendously
A couple times a week, I’ll get an email from a reader asking some variation on this question: If I can refinance my house at 3.5% why would I ever want to pay it off early if I can earn 7% over the long term in the stock market? Debt freedom seems like a bad
If you take out a $200,000 loan for 30 years at 4.5% interest, how much in debt are you? Some might argue that you’re only $200,000 in debt. However, when you look at the payments you’ve committed yourself to making over the years, you’re actually promising to make payments totaling $364,813.20. Thus, I’d argue that
A few weeks ago, I put out a call on Twitter and on Facebook for detailed posts that people would like to see. I got enough great responses that I’m going to fill the entire month of July – one post per day – addressing these ideas. On Facebook, Tyler wanted to know, “Should I
Quite often, when I write answers to reader mailbag questions, I encourage people to keep pushing hard against their debts no matter the interest rate. Almost everyone agrees that it makes sense to rapidly pay off the 15% debts, but I’ll often get a lot of disagreement about the 3% debts. People will often ask
Carolyn writes in: For the longest time, I’ve been making larger than minimum payments on all of my debts. I got the idea from Suze Orman because she said that if you just make minimum payments, you’ll never get rid of debt. I have two credit cards and a student loan. Here are their interest
You’re in a relationship. That relationship is starting to get serious. You’re contemplating marriage or some other form of long-term commitment. Now what? Quite often today, people are bringing significant debt into relationships with them. Credit card debt. Student loan debt. Auto loan debt. I often get emails from readers asking me how to deal
You’ve realized (finally) that you’re in a precarious financial situation. You’re spending more than you earn – sometimes quite a bit more. You’ve racked up a fair amount of debt. Now, you’re seeing that some changes are going to have to happen in your life, but those changes sound utterly painful. What do you do?
A reader who asked for anonymity wrote in: I’m visiting a lawyer next week to get started on filing for bankruptcy. I have no way to pay my debts or even make the minimum payments each month. My problem is that I simply can’t find a place online that actually explains what the different kinds
Quite often, I get emails from readers asking about the “best” way to purchase a particular car that they want. They have their eye on some new model and want me to essentially tell them that it’s okay to purchase it. I rarely do. Taking out a loan for a car is only a good
I have lots of readers here in the central Iowa area, so it came as no surprise to me that when I began hearing an ad frequently on local radio advertising a particular mortgage product in terms that were a bit on the confusing side, I received an email about it. Jim writes in: I
Let’s say, hypothetically, I have $50,000 in cash just sitting in my savings account. I need to replace my car and I’ve decided on a model that costs $20,000. I can get a very low interest loan for that car from the dealership – 0.0% or 2.9% or something like that. What do I do?