Saturday, January 17, 2009

Free Tax Cut Premium

Monday, January 12, 2009

P2P Lending Debacle

For those of you who haven't heard, the P2P Lending sites (with the exception of Lending Club) have been under a cease and desist order for some time.  Normally in my Prosper account, I would have a return of 13.8%.  I typically reinvest the payments I receive when they reach the $50 minimum to bid on a new loan.  However, since Prosper is no longer accepting new loans, my money just sits there not earning interest.  This is cutting into my effective APY.  For this reason, I'm in the process of withdrawing my funds from Prosper.  I haven't decided whether or not I will move them to Lending Club.  With the economy how it is, the risk of default is probably higher.  I think I may just put the money back in savings.

Saturday, January 10, 2009

Chop Your Mortgage

Have you ever heard that you can chop years off your mortgage just by paying a little extra each month?  Well, it's true!  Let me show you how you can calculate your savings resulting from extra payments on your mortgage.

For this example, I'll be using's Mortgage Prepayment Calculator.  Let's say you have $100,000.00 remaining on your loan.  You've owned this place for 1.5 years and so you've got 28.5 years left on the mortgage.  Your interest rate is 6.5% and you make payments every month.

1. Enter 100000 as the loan amount in the first box
2. Enter 6.5 as the interest rate in the second box
3. Now, you need to figure out how many months are remaining on your mortgage. 28.5 years * 12 mos./year = 342 months.  So, enter 342 for the third box.
4. Most likely you make payments every month.  So, enter 12 for the fourth box.

5. Now, if you'd like to know what adding $200 / month will do for you, setup the first line of extra payments like this: Monthly | 200.00 | 1 | Until End of Loan | [leave this blank]

Now click "Display Extra Pmt Benefits."  You will see that an extra $200 /mo. will result in a savings of $59,379.04 and shorten the length of the loan by 151 months (12 years and 7 months)!!

Thursday, January 8, 2009

$7500 Federal Housing Tax Credit

For aspiring home owners who find their goal stubbornly elusive, newly enacted legislation providing a tax credit of as much as $7,500 for first-time home buyers might just be the opportunity of a lifetime.

But like so many of the good things in life, time is of the essence for buyers who want to take advantage of this outstanding opportunity. Only homes purchased on or after April 9, 2008 and before July 1, 2009 are eligible. Use the links below to learn more about the tax credit.

If this offer sounds too good to be true, it's because it is. Reading the website you might not realize what the catch is. Although the government is giving $7500 to qualified new home-owners (income of < $75,000 and have not owned a home in the past 3 years for single individuals) you are required to pay that money back over 15 years or whenever you sell the house. You make no payments for the first 2 years and if you sell the house at a loss, the debt is forgiven.

On the whole, I would not recommend this unless it's absolutely necessary. I don't think it's a good reason to buy a house you wouldn't otherwise buy or be able to afford, and I'm always against taking on unnecessary debt. However, if you think you are disciplined enough to invest it instead of blowing it on something and you can afford your new home with or without the tax credit, then go ahead.

2009 Action Plan for Free!!

As someone once told me, "if it's fo' free, it's fo' me!" Until January 15th Suze Orman is offering up her book, Suze Orman's 2009 Action Plan, for free!

Sunday, January 4, 2009

Jack Bogle Wishes Bogleheads a New Year

Jack Bogle, founder and former CEO of Vanguard, visited the Bogleheads forum to wish everyone a new year. If you haven't read it yet, I highly recommend grabbing a copy of The Bogleheads' Guide to Investing and finding out what it means to be a Boglehead!