Weekend Reading - Magically Cut Your Mortgage in Half with $3,500
Random articles that caught my eye this weekend:
- Money Merge Accounts - I hadn't heard about this till I stumbled on this article over the weekend. The buzz is on buying a piece of software (and HELOC account I guess) for $3,500 that lets you blitz your mortgage payoff in an unusual way. You turn your HELOC into a checking account, have all your deposits and expenses come out of the HELOC and use the float to help reduce your outstanding principal allowing you to payoff your mortgage much quicker. I have thought of using this technique to some degree previously with my HELOC and now I am more convinced I should spend more time looking at it. However the $3,500 opportunity cost on this product makes this an easy decision for me -- I'll stick to my own money management system for now.
- The Fisherman and Investment Banker - I have read this story before but rereading it helps me keep perspective sometimes.
- One click backup script - I had a computer hdd crash this weekend and lost some photos and 3 months of MS Money data. Ugh. Fresh on my mind, I stumbled on this easy one-click backup solution for my flash drive. I like this idea much better than the current manual copies I do out of sheer laziness. Still not a regular backup, but I don't need the hassle of one yet. Just something easier for me to use when i feel like backing up. Its also perfect for any personal files on my work pc since I can't install any backup software on it. For those less constrained on there backup methods check out these free online backup options.
- 2007 Berkshire Annual Shareholder Letter Berkshire Hathaway released Warren Buffet's annual letter to shareholders this past weekend. As usual, loaded with good stuff.
For all the talk of buying what you know, it turns out Buffet bought Amazon.com euro bonds in 2002 and made a nice profit on them and the currency exchange. That surprises me, but I guess because he was loaning the money, instead of buying part of the company that rule of thumb didn't apply.
Perhaps my biggest takeaway from reading through it was Buffet's cost basis for the previously announced 8% stake in Kraft is higher than its current trading range at ~$31/share. The company still looks like it doesn't have a large enough margin of safety to me, but if it were to dip into the mid-20s I would be taking a really close look at making an investment. The company has everything Buffet loves - loads of intrinsic value, ability to deal with inflationary pressures, brand names that are unreachable.
Related in General:
Save Money on Overhead Garage Storage (Aug 28, 2012) With the upcoming expansion of our family, my wife and I have been discussing the space in our home. While we have a good size home (~2,600 sq ft), its currently laid out with 3 bedrooms and 1 bonus room...
When is a SmartPhone the Right Financial Decision? (May 14, 2012) I last purchased a typical cell phone back in October 2008 with a 2 year contract when we returned from China. My old cell phone broke while we were on assignment in China and I needed something once we...
Black Friday Shopping Highlights (Nov 27, 2011) I have little interest in going out and standing in long lines to pick up a few deals on Black Friday. However we did pick up a few deals over the weekend mostly online: $159 GE Front Loading Washer @...
Comments (5)
Don't fall for it! You can't borrow your way out of debt!
The only way to pay down your mortgage is to spend less than you make and apply the extra to the mortgage. All the software does is that over time (and somehow confuses the issue with a HELOC).
A lot of the comments from the simple dollar said something like "You can always have your HELOC to fall back on". HA - equity in your house is not a right - banks can choose to loan it to you or not. Most of them are renewable - once a year they review it and if they don't like your situation, they call the loan, payable in 30 or 90 days. Talk about what you don't need when you are having an emergency!
Posted by Matt | March 3, 2008 7:55 AM
i gotta agree w/ matt, as well as yourself, on this one. as someone who just had their HELOC account frozen last month, it's not the best of plans out there.
i did, however, apply the concept of a money merge account to our situation. our 2nd mortgage is a heloc (which was maxed out when we purchased the house) and it's currently set at interest-only payments. SO, since it was at a higher interest rate than all other loans we have, we we used our savings money to pay off a nice chunk of it, thus reducing our payments and creating more "equity".
this worked for a good 6 months, and saved us at LEAST $200 each month....until it was frozen due to the scares in the housing market, and falling home prices around our DC area.
In theory, it worked great (and we didn't have to pay a $3500 fee), but on the other hand we now absolutely zero access the our savings money that we threw at it.
I think all in all the concept is pretty sweet for some people, but you better have the cajones for it :)
Posted by budgetsaresexy | March 3, 2008 11:15 AM
Money Merge is a scam for the mathematically illiterate.
Posted by ETFnerd | March 3, 2008 1:55 PM
For all online backup, file sharing and storage related info, I recommend this website:
http://www.BackupReview.info
Posted by Jenny | March 3, 2008 11:48 PM
Ha, another comment that calls for closer look at Money Merge account. I've been trying to gather some information on this software (actually trying to nab a copy...) but really if you look at the math the benefit can't be all that great.
It's basically the same as putting all your excess cash towards mortgage principal. If you really need money later, just take out via HELOC.
Posted by Jonathan | March 4, 2008 7:35 AM