Personal Finance Advice: Skeptic Finance

5 Great Reasons To Have An Interest Only Mortgage

Apr 012013

5. It’s financially sophisticated. Especially if you are in your 20s, most of your friends will still be throwing away their money on rent when they could be investing it in a ~~house~~ home. Seriously. You get to tell them how your home is appreciating at 5% while the interest rate is under 3%, returning you a safe and easy 2% annual rate of return. If you really want to blow them away, let them know about the great tax benefits of having a mortgage.

4. You’re supporting a good cause. Bankers need to eat too.

3. Tax benefits. You get an easy tax deduction without the added cost of loan repayment. This can be further enhanced with an adjustable rate mortgage (aka an ARM). After the initial fixed rate period, rates adjust based on market conditions. Since rates are historically low right now this will almost certainly mean the adjustment will be to a higher rate. If you accidentally pay part of the principal on your loan (don’t feel bad, I’ve done it too) this rising interest rate can help to protect your tax deduction. Ignore those pesky math nerds who claim the mortgage deduction doesn’t make up for the interest costs, they’re just mad because the cost of suspenders is up.

2. It’s more affordable. You can get a interest only, adjustable rate, mortgage for much less than a repayment type (principal and interest) mortgage. Especially on shorter term loans the principal payment can be more than half of your total payment!!! Why pay this unnecessary expense if you don’t have to?

1. Rich people do it. Nuff said.

There you have it, 5 compelling reasons not to pay principal on your mortgage. Did I miss any?

A Recent Favorite (And My Wife’s Appendectomy)

Favorites, Personal 3 Responses »

Oct 302012

I have been a bit absent from the PF blogosphere lately, although I haven’t forgotten it… Here is one of my favorite posts from the last week or so. I like it because MMM dispells the idea that frugality and cheapness are one and the same. I consider myself frugal, but I haven’t stooped to the level of eating goat heads or making my own toilet paper (which may turn out to be even more economical on a diet of goat heads).

Frugal vs. Cheap | Mr. Money Mustache If you haven’t read the Mr. Money Mustache (MMM) blog yet, I highly suggest you check it out. [Warning: He does swear occasionally]

On a more personal note my wife had her appendix removed on Friday. Praise God for health insurance. We haven’t yet received our statement of benefits from the insurance company, but it will probably be $10K or more. Fortunately we have good insurance and only paid $40 out of pocket. The whole experience was draining on us both, and it really makes me thankful for all the doctors, nurses, and other hospital staff who made took such excellent care of her while my mind raced through the various possible outcomes. It’s scary watching them wheel away someone you love, knowing that soon she’ll be unconscious with a machine breathing for her and surgeons removing a (albeit unnecessary) part of her digestive system. Fortunately everything went well and she is back at home recovering.

Are Prepaid Phones Worth It? (Part 1 of 3)

Minimizing 1 Response »

Oct 232012

I’ve been quite annoyed with Verizon lately. I rarely use my phone, averaging around 50 minutes per month, 80 texts, and about 50MB of data. A minimal voice/text/data plan would be ideal for me. Yet they really don’t offer any options for low usage plans. Our family plan for 2 phones includes 700 minutes, 2GB data and unlimited texts and costs around $160/month, or $80/month for each line. This is the cheapest 2 year plan that includes voice/text/data service that Verizon offers.

It doesn’t take long to figure out that we’re overpaying for service. I’ve looked at various prepaid providers and even the more expensive ones would be cheaper than what we’re currently shelling out. At the high end, domestic minutes are around $.10/min, texts are $.05-.25 each, and data tops out around $.99/MB. At my current usage that would amount to about $75/month. Clearly not much of a difference, especially when you consider the phone subsidy built into the monthly tab. Continue reading »

How Important Are Mutual Fund Expense Ratios?

Investing, Taxes No Responses »

Oct 152012

There are a number of fees associated with mutual funds beyond taxes on the gain. Perhaps because most of these fees are relatively hidden, or maybe people just don’t realize what they are, they are often not taken into account when selecting mutual funds. Unfortunately for these people, what they don’t know may be costing them big bucks. Continue reading »

Are You Better Off Now?

Goals, Retirement 3 Responses »

Oct 042012

Retire By Forty recently posted Are you better off than 4 years ago? and it got me thinking. The question is usually used in a political context, but it’s my opinion that framing it only in a political way is doing people a disservice. While clearly government plays a role in our personal lives, I don’t believe it plays as big of a role as some people (including Obama and Romney) would have you believe.

I understand that while running for office your goal is partially to get people to believe that if they elect you then their lives will improve. It’s no doubt an effective method, or they wouldn’t keep trying it time after time. The problem is that while it’s effective, I don’t buy it. (If a candidate ever claims “voting for me will have no effect on your life” I might just vote for them). Continue reading »

AdSense Earnings!

Blogging 2 Responses »

Sep 262012

Score! I earned my first penny with AdSense! Given that I’ve probably put a good 40 hours into this blog in the last month, that’s like $0.00025 per hour, just a shade below minimum wage. Ok, so not exactly anything to write home about, but still exciting that people are actually finding my site and reading it. Now to get the CTR up above 0%

So here are my questions to you, my excellent readers…

If you blog, is it monetized in any way and would you be willing to share your monthly income?
Is what I’ve provided so far worth that penny?
What would make this site worth even more, perhaps 10 pennies?

Weekly Favorites

Favorites 3 Responses »

Sep 242012

I was sick all weekend and still am not feeling great, so writing anything has just not happened. I did spend a fair amount of time reading though, here are a few of my favorite posts from other PF bloggers in the last week.

Cloth Diapers vs. Disposables: Cost Comparison - This is my favorite type of post. Not because it involves diapers, but because it looks at the costs behind a common every day issue rationally. Since this is one of my main goals for this site, it’s always good to find another blogger doing the same thing.

Stop Buying the Hype: The Average Rate of Return isn’t What You Really Earn - I liked this one because Jason reminds us that average rate of return is important, but not the only thing you should be looking at when selecting investments.

William Cowie of Drop Dead Money’s guest post What Will YOU Leave The Next Generation? on J. Money’s blog, BudgetsAreSexy. I especially like the quote “Debt Is Nothing Other Than Impatience”.

That’s all for now!

Driving vs Flying: Which Is Really Cheaper?

Cars, Comparing, Flying No Responses »

Sep 202012

My in-laws are planning on coming to visit in a few months, and are discussing whether to fly or drive. Being an engineer and money geek, I figure a proper analysis is in order. These are the questions to answer

Which would be cheaper?
Are the cost savings worth it?

Assumptions…

Round trip distance is 1800 miles. (Washington DC area to Wisconsin and back.)
Their car averages 24 mpg on the highway.
Gas is $3.75/gallon.
Two round-trip airline tickets would cost $600 total.
They would stay in a hotel for one night each way if driving.
They would eat 3 meals on the road each way for $20 per meal.
If flying, they would take public transit to/from their home airport and we will pick them up from the local airport. In other words, no parking, cab, or rental car fees.
The airplane peanuts will be enough food if flying.

Lots of assumptions, but it will give a better picture of the total costs then just accounting for gas vs plane tickets. Continue reading »

Running, Budgeting (and Blogging)

Blogging, Budgeting, Personal No Responses »

Sep 192012

What do running, budgeting and blogging have in common? They are things that I usually enjoy but other times I would prefer to forgo altogether in favor of sitting in front of the TV. The usual culprits involve chips, salsa, beer, and the History Channel. Coincidentally, they’re also much harder to do after the more lazy alternatives. Ever try running a few miles after having a beer? It probably won’t end well.

Fortunately for me, I have a wife who reminds me about these things. Otherwise I probably wouldn’t ever run and doing our budget might not happen every month.

Another thing that running, budgeting, and blogging all have in common is that I have never once finished and said to myself, “I wish I hadn’t done that.” I’ve pushed a bit to hard running or gotten annoyed that we had overspent our budget in one category or another, but I’m always glad to have done it.

So how about you, what discipline is it that you would rather not do sometimes and how do you stay motivated?

Joining The Yakezie Challenge

Blogging No Responses »

Sep 172012

First, please don’t ask me to pronounce “Yakezie” properly. Not going to happen. That aside, after the suggestion of Emily @ Evolving Personal Finance I decided to join the Yakezie Challenge. I’ve already been doing some of the things required by the challenge, so adding a few more should be easy.

The goal of the Yakezie Challenge is to improve page ranking and build community among personal finance and lifestyle bloggers. The rules are as follows:

Install the Alexa toolbar if not already and comment what your current Alexa ranking is, so we can keep track. (Done)
Write consistently 2-4 times a week for 6 months. (Already a goal, so far so good.)
Install the Yakezie badge with pride. (Done)
Announce on your blog that you have joined the challenge. (Done)
Selflessly promote others. (Forever a work in progress.)

The Alexa ranking bit interests the engineer in me, so I’ll also be keeping a spreadsheet of my ranking and posting graphs from time to time. Everybody loves graphs. For the record, at the time of writing this my ranking is 17,066,645. I may need a log scale for my dependent variable…

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