I did a quick financial review of 2011. My net worth is up by about $13,600. My liabilities (mortgage) only went down slightly, but we should do better in 2012 since we will be paying extra on our mortgage every month – enough to make a full two extra payments. Extra income helped – made $2500 between the various odds and ends we do to make a little extra. That was much more than I expected. We probably will not hit that figure in 2012 since my work load at church will be heavier and I will have to scale back my time in other areas. Our savings toward a replacement vehicle went well, and we are slowly (and I do mean slowly!) building up our emergency fund.

I broke about even (slightly ahead) on my retirement savings- what a crazy year for investing. Basically what I put in is what I got this year. Hopefully things will settle down and I can start getting some good returns from my investments.

All and all not a bad year financially. One of the areas we want to focus on in 2012 is building up our emergency fund. After it took some big hits in 2010 we just have not been able to put away as much as we would like. Hopefully that can change in 2012.

How did you do in 2011? Any surprises?

 

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NOTICE OF INTEREST OVERPAYMENT – that is how the letter started from Equity Plus. It then went on to read:

“According to our records you have not elected to participate in our bi-weekly mortgage program. The program could save you $40,000 to $100,000 in interest and reduce your mortgage term by 7 to 9 years.

What the letter says is “true”, but what they don’t say is that you have to pay for this privilege! Nor do they mention that you can do this yourself without paying them a hefty fee.

I also received a “nice” letter from a company in Palatine, IL, concerning a “Mortgage Protection Plan”. Now that I have a new mortgage I should protect myself and my loved ones from the loss of our home in the event of death, disability, chronic illness, critical illness or terminal illness (I guess they covered all the bases!). Why should I buy overpriced insurance? I already have life insurance to cover me.

It’s amazing the amount of junk mail that you get after you refinance a mortgage! Your best bet? Throw it out, or if you have a fireplace, maybe use it for kindling!

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I called Wells Fargo to check on the status of our Home Mortgage Refinance – we have been approved! Just waiting now for formal notification in writing (or by email). The refinancing lowered our monthly payment by over $90 per month, but we will be paying an extra $100 on the principal every month so we can pay the loan down faster. So by refinancing (and making the extra payment which is only a little more than our current payment) we will reduced our loan length by over 4 years. And the refinancing did not cost us anything. Sweet!

If I get a raise this year (which I should find out hopefully by the end of October) I hope to take some of that raise and pay even more on the principal every month. I would love to get this paid off within 20 years (even less if possible).

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I have been thinking about refinancing my mortgage since rates have plummeted again. My current 30 year mortgage is 4.75% with Wells Fargo. After talking with a representative, I could refinance into another 30 year mortgage at 4.125% with no closing costs. It would take my payments from approximately $752 down to $660, although we would continue to make the $752 payment to decrease our mortgage length and interest. By doing so we would reduce our mortgage by four years (from the length it is now).

What I would really like to do is move into a 20 or 15 year mortgage but I cannot quite swing the monthly payment, it would be tight and could lead to a cash flow problem if inflation keeps rising. So if I do pull the trigger on the 30 year mortgage refinancing, we would try to pay as much extra as we could each month so we could shorten the number of years (and interest).

The biggest downside for us about refinancing is starting the 30 year clock over again, but based on my rough calculations if we continue to pay at least what we currently pay we will come out ahead year wise – just need to be diligent!

As I said we haven’t pulled the trigger yet. We have locked in a rate, but do not have any obligations or risk if we back out. I have about a week before I have to decide whether to pull the refinancing trigger or not!

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Last week we finished week 5 of our 13 week Financial Peace Seminar. Week 5 is “Credit Sharks in Suits” which mostly focused on debt collection. Hopefully if you are a regular reader you do not need this information! Although I have never been faced with owing a debt I could not pay, I have been harassed by debt collectors because of mistaken identity. They can be a pain! In once instance I had to have a lawyer send a letter “asking” them to stop – it’s amazing what a letter on legal letterhead can do! It really does pay to know your rights regarding these collectors.

The biggest news from the seminar is that I have seen a dramatic jump in people coming in for financial help. In the past two weeks I have worked with four different families helping them with budget/ financial questions! Wow! I expect this trend to continue as people (some for the first time) begin to really look at their financial situation.

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We had our 4th Dave Ramsey video session last night (13 sessions total). The attendance is 64 people and they are pretty faithful in coming every week.

Last night’s video on debt was the best in the series so far. At 100 minutes long, I was worried that it would be tedious and boring – wrong! If nothing else, Dave Ramsey is a great communicator and motivator. I can’t say that there was anything new in what he said about debt, but the way he packages the information and the intensity in which he delivers it makes it memorable and I believe helps individuals change their habits.

I have been budgeting for 26 years, have for the most part stayed out of debt except for a mortgage (once or twice in my early years I had a little debt that was paid off rather quickly – in about a year). But after last night’s video even I was motivated to do better!

I have been some what nonchalant about our mortgage. Now, my wife and I are motivated to be a little more aggressive in paying it off. It’s a 30 year mortgage, but we would like to see it gone in under 15 years.

So if you get a chance, I would recommend see the video on debt (this session is usually free if someone invites you to the seminar). It really helps motivate you in the right direction to do wealth building by paying off debt as fast as possible and avoiding it in the future.

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My current mortgage rate is 4.75% for 30 years. With interest rates dropping almost weekly, I started casually looking to see if I could get a better rate and a good deal (low refinance expenses). I started with Wells Fargo because that is who I have my loan with now, and they have been pretty good to deal with.

So I went online and filled out some basic information. On the form it stated how you would like to be contacted – I put by email. I can be hard to reach by phone, and I really didn’t want to talk to a salesman. I just wanted some quick basic facts.

The next day I get an email asking me to call. I ignored it. So then about 2 days later I get an email asking me to call again. I replied back what I wanted to know and asked them to email me the answer. The next day I get an email asking me to call. I don’t want to call! Why ask me my preference if you are not going to abide by it? Frustrating!

Then I get a call from them from a salesman. Against my better judgment I did talk to him. He got my general info – which I had already included in a previous email which they obviously didn’t read. The salesman thinks it would be best for me to refinance to a 20 year loan at 4.75% What? He thinks it it a good idea for me to pay refinancing costs to just change my loan from 30 to 20 years? I can do that myself just by paying a little extra. He was no help and a waste of my time and he was trying to rip me off by having me refinance for no reason. I don’t like my time being wasted and I especially don’t like being ripped off.

I have no great need to refinance, just was looking for a deal. So I will wait to after our vacation later this month and see where rates are. If they are still good or even l0wer I may check out another company.

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I am excited. We are now less than two weeks away (September 14) from hosting the Financial Peace University seminar. As the Coordinator, I have been very busy these last few days. We have over 50 people signed up to attend!

I will begin previewing the sessions (one of the perks of being the coordinator is that I have access to the DVDs) next week. The preview video which we have shown twice so far to two different groups is really good, and it was only about 20 minutes. The preview highlights the topics that will be covered and gives a brief glimpse into Dave Ramsey’s background, and gives a few stats concerning American Finances. The average length of the actual  seminar video’s is one hour.

13 weeks is a long time – from September 14 through December 7th. I hope I can keep motivated giving up so many Tuesday nights in a row (I already give up my Wednesday nights for church / work). But if a few people can get their finances in order, then it will be worth it. Plus, maybe I will get a few blog articles out of it!

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As part of my work at the church I do volunteer financial counseling.  A while back I met with an individual who had concerns about their finances – they just couldn’t get all their bills paid, had some credit card debt, and wanted me to look over their finances. So I went over to their place and we took a look at what was going on in their financial life.

One of the first things that I did was try to get an understanding of their monthly income and expenses. This way I could see quickly where they were financially – did they have enough money to meet expenses or were they digging themselves into a financial hole? Basically it is just putting down on paper what their “budget” is.

When I finished calculating their monthly income and expenses, I had to tell them that before taking money out for groceries (they weren’t sure how much they spent on that) they were already spending more per month than they were earning per month!

So I went over their spending and found a few areas they could trim. One of them was their T.V. expenses. They were spending over $100 a month on satellite and accessories. So I suggested that they cut back.  They just looked at me. So I repeated that they didn’t have any money in their budget for groceries so they had to choose between eating or watching T.V. Again, no response. I wrapped up the meeting as best as I could and thanked them for their time and willingness to have me come over.

This person was asking me for help. They knew that their finances were in trouble. But when it came down to choices, they were not willing to change their lifestyle, even if that meant no food! Financial choices are hard to make.

Budgeting is a simple concept, but it is very hard to do. We (and I include myself) do not like to deny ourselves. We want things, and we want it now, sometimes regardless of the price we will pay later. Living on a budget is not for sissy’s. It is hard. But the rewards are worth it.

P.S. The actual story above is true, but the events & situations have been modified to protect the identity of everyone involved.

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In January of 2009 we refinanced our mortgage, lowering our interest rate from 5.5% to 4.75%. So how did we do last year? We lowered our outstanding balance from $144,100 to $140,901. Our mortgage payment is $751.70 (interest and principal only). To that we paid an extra $110.30 per month for 10 months (beginning in March). So we paid an extra $1,103 last year. Plus, our credit card, instead of cash back pays our mortgage, so from that we paid an extra $225. We paid a total of $3,199 off in total principal last year in basically 10 months. Not bad.

Hopefully this year we can make an even bigger dent into that principal. I would love to pay this off in 15 years and save all those “pennies” in interest, but we would have to drastically increase our payments. Since banks aren’t paying any interest right now, I would rather get a 4.75% return on my pennies (savings on the interest from the loan) than the 1% the banks are giving. However, right now we have to focus on our emergency fund and get that built back up first since our “water” emergencies have drained our fund. After that is built up, maybe we can shift focus.

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