Now is the time to refinance your mortgage
Let me be clear that I think the continued suppression of interest rates by The Fed is a mistake. All I believe is going to happen is more delay to the recession/depression we have to go through and right now delay simply means when it fully hits it will be worse due to the delay.
That doesn’t mean you can’t be smart and benefit from this. If your interest rate is more then 3/4s of a point then current rates odds are in about a week or so you will get the chance to shave a point or more off it. The Fed seems committed to yet another cut either in the next few days or at the end of the money the next time they meet. I have the following advice for people in different categories.
1. If your rate is above 6 percent odds are you can cut your payment a significant amount with a refinance in the next few weeks. If you have the credit to qualify and if it saves you money, do it.
2. If you have decent equity in your home 30-60K or more and if you owe 10-20k in consumer debt and if your rate is at, near or above 6 percent you may have the opportunity to refinance, pay off your debt and pay LESS or very little more each month on your house payment. If so and if you are willing to cut up the credit cards you pay off, do it and do it now.
3. If you were a dumb ass and got into a sub prime or adjustable loan see what you can do to get a conventional 30 year FIXED rate loan now. There probably will not be a better time for a while. As soon as even a hint of rebound in home sales come these rates will not be held so low any longer.
I am not a massive fan of cash out refinance for paying off other debts. Many times this is something that gets abused. If you plan to take this approach again it is necessary to make sure you get rid of that credit card that got you in the hole in the first place. Yet there is no question that debt on housing is better then debt on credit cards. I honestly believe for the home owner with equity, good credit and some unsecured debt this may be the best opportunity in a long time to consolidate bad debt into not so bad debt. If you do it, look at it like a “stay of execution” and commit yourself to a renewed quest toward financial freedom.
Filed under Business & Marketing | Comments (2)Tax rebate checks may be on the way
In an effort to stimulate the economy the congress and the president are working to provide an economic stimulus package. One big part will be sending most tax payers some of their tax money back, to the tune of from 300-800 dollars per taxpayer may be even as high as 1600 per household. You can read an article by newsday.com to get more specifics about it.
In any event I have mixed emotions about this. As a Libertarian I believe that all income tax is theft in the first place and I really can’t argue with the government giving back money they should have never taken in the first place. However, in this instance while not totally opposed (I just can’t oppose less tax no matter how it comes) I have sever very big concerns/issues with this plan.
- Right now everyone is worried about the 2008 election. So even Mr. and Mrs. raise taxes (Barak and Hillary) are behind this massive retroactive tax rebate. Make no mistake this is buying votes by both sides of the isle.
- True conservatives are always saying lower taxes are good for the economy and liberals always say that is wrong. Yet now that we are in deep shit everyone agrees cutting taxes makes the economy better? All this means is they all know all the time that low taxes are good and simply keep up the graduated income tax as a way to distract us all with “class warfare”.
- In most instances I don’t see cutting taxes as “spending” yet in this case it is pure reckless spending. Why? How? Simple, no one in congress is talking about cutting any expenditures to fund this rebate. In other words they are still going to spend all the money they were going to spend and GET THIS our country is OUT OF MONEY. So where will we get the billions to fund this rebate? Well the fed will fire up the presses and just print more money at least symbolically. Honestly though our government will borrow it from foreign governments and increase out debt. In other words you kids get to pay back you debt on your 800 bucks with interest and will have to do so with a dollar that is weaker in the world market every day.
- This package is a very short term fix. The whole theory is most people will “blow” their money and dump it in the economy and that will beef up spending for a bit and put more money into the economy and the rising tide will then float all boats. The theory is sound most people will blow it (instead of saving or paying on debt) and it will make it “better” but our “boat” has big holes in it. Make sense? This move won’t reduce US debt, reduce toxic consumer debt, fix the housing market or reduce our massive spending deficit.
So how could this plan actually work? You only have to change the spending equation on the side of the government to make it work very well. Check this way out,
- Require the government to give back at least the money they plan to right now.
- Require that they also cut 2 dollars in spending for every dollar returned to tax payers
That’s it! That would “stimulate the economy”! Our nation is not in trouble because our people spend to little, it is in trouble because the government takes too much of our money and then spends far more then even what they steal from us. Fix that problem, yes cut taxes but cut spending by 2 dollars for every dollar you refund to us.
Filed under Business & Marketing | Comments (4)More about silver
With all the talk of a coming recession I am sitting down with my financial adviser this week and I am moving more of my money out of U.S. stocks and for that matter U.S. dollars. I am buying more gold, more silver and more foreign government bonds. Please understand that I tend to hold gold and silver more in “funds” then in hard metals. Though I do think there is a place to actually hold some bullion as well.
As I have been researching silver I came across an investors web site that specializes in metals called Monex Precious Metals, and they have a great page about silver. I encourage you to watch their video about silver as you will learn some pretty interesting silver facts.
One suggestion is that the video does not stream well. I advise you to click play, let it run a second, then click pause and let it pre load while you do something else. Come back to it in a few minutes and then watch it. Someone should get with Monex’s marketing department about using YouTube for their videos. I am 100% sure that bad steaming is costing them viewers.
Filed under Business & Marketing | Comment (1)Teaching kids to invest and think smart about money
I know a lot of adults that are doing what they can to teach kids about investing and saving money. The most common way is the good old fashioned piggy bank. There is something to be said especially with younger children to putting some change in a piggy bank. It is a good start but it is also quite limited. With the good old pig you always can open him up and raid the savings and the savings lack any type of leverage. You earn no interest and little Johnny’s or little Dorothy’s pennies end up worth less ever day, unless they are solid copper that is.
My view is it is important to have kids open their first bank account as soon as they are old enough to grasp the concept. A Roth IRA with some monthly contributions should be set up by age 12 and money should be discussed from a positive outlook. Don’t teach your children things like, “money is the root of all evil” as that is not the proverb anyway.
People that do well with money come from homes that discuss and value money. Now of course you must teach ethics, family values and over all life lessons as well. Your kids shouldn’t worry about money or believe it is the end all be all. Yet they should understand it and its power, both good and bad and you should teach them the Building Wealth Philosophy as early as possible.
One of my favorite books for parents helping kids learn to invest is Rich Dad Poor Dad for Teens The Secrets About Money–That You Don’t Learn in School! To me this book is an absolute must read.
One way or another make sure you are making things like money, avoiding toxic debt, savings and investing positive topics of discussion with your kids. I am not saying your kiddos first words should be leverage and interest over mamma and dada but you get the point.
Filed under Personal & Home | Comment (0)Saving money on glasses
Ok well this is a website I was asked to take a look at that I now can truly endorse as a very cool resource for “cutting costs” which of course is 50% of our wealth building formula here at CutThatBill.com. So what is this Great Discovery: www.ZenniOptical.com? It is a website called ZenniOptical and they offer a full single vision pair of eyeglasses as low as 8 dollars.
Now I have been to stores advertising lost cost glasses in the past and found that they low priced ones were what we called BCGs or “birth control glasses” back in the army. In other words they made you look so bad that no one would be interested in you. This is not the case with ZenniOptical. They have a huge selection and I even found memory titanium frame for between 10-30 dollars with lenses. If you wear glasses then you realize how good these prices really are.
I have decided to get a pair of these just to have as a back up for if something happens to my glasses or if I just briefly misplace them, I have been known misplace things a time or two.
Trust Deed Investing a Creative Investment Strategy
Right now the mortgage industry seems to be in melt down but real estate investing has a proven track record of making great returns even during recessions, that is when properly leveraged. In short trust deed investing is basically when private investors loan money that has real estate offered as collateral against the loan. Trust Deed Investing is nothing new; banks and private individuals have been loaning money against hard assets like land and other real estate for centuries.
In essence trust deed investing is like taking the position of being the bank in a mortgage vs being the slep paying interest for 30 years.
I recently asked to review a website for Diamond Bay Investments who specialize in trust deed investing. They are currently advertising returns of 12%. Investments like these are not with out risks and you should of course consult with your financial advisers before investing with any company or investment.
That said trust deed investing has a high potential rate of return and it is protected by a hard asset (land, property, buildings) so it is worth considering. It is not a place I would advise anyone to put all their money but it is one underutilized investment option that is a great part of a long term balanced investment portfolio.
Filed under Wealth & Investing | Comment (0)What are you doing now that 2008 is here?
Don’t worry this isn’t one of my “get your financial butt in line” posts, well mostly not. I am just wondering what everyone is up to in general, like what you are watching on TV, etc. Personally I have been enjoying Celebrity Apprentice quite a bit. Check out this video showing what a snake that Omarosa is. Got to be one of the biggest sleezes known to man in my book. To me this is why so many people are looking to build a business of their own, to buy a business or just to find some way to be independently employed. I mean who really wants to deal with a corporate environment that has far more then its’ fare share of Omarosas.
I have also started out on a diet. Last year I elected to not go Elk hunting because honestly I was afraid I might die somewhere alone on the mountain. The last time I went I had a great but tough time. I came home with blistered and even bloody feet and was sore for a week. Back then old CostCutter was in much better shape. This year going out into the unforgiving wilderness alone seemed like a big risk. Since I am way to young to give up that type of life I am getting back in shape. Who knows, perhaps when I loose my weight I will come clean and say who I am.
Additionally I am breathing some new life into a few of my businesses with some creative ideas and looking to hire a few new creative and talented people. The search for talent is really tough right now, I just listened to this podcast on the shortage of talent in the market today and I have to really agree with the guest speaker. While real estate investing today seems to be a buyers market there is no question that in the talented and skilled employee market it is a sellers market. If you are good, have a proven track record and can deliver then today you call the shots. If you are in the market for a new position and are not finding a lot of opportunities I recommend you get in touch with a good executive recruiting firm.
On another note all together I really think the 2008 presidential race is off to an interesting spin. Ron Paul still seems to be shunned by the media despite basicly finishing in a three way tie with 10% of the vote while Rudy was at only 4%. Typical!
Today we focus on New Hampshire, I predict the following for the republicans.
1. Rudy does aweful and everyone says it doesn’t matter.
2. John McCain wins and his national numbers rock because people are lemmings.
3. Mitt Romney does OK and comes in second and they say it is over for him.
4. Ron Paul does far better then the 8% the polls say he can expect. Comes in third and gets ignored again.
Such is the stupidity of our media and the political process.
Moving on the the Democrats - Hillary has had a break down practically coming to tears because she was asked how her day was mostly because Barock Obama is now surging in New Hampshire and she is on track to loose again. Of course the news is making a huge deal of Barock’s massive support. His followers indeed love him, they laud his speeches and vision yet the news people can’t seem to find a single supporter that actually knows his position on any of the big issues. America, please wake up, support who you want but for the love of God know why you support them.
My personal view I think Hillary is a disaster for this country as our President, her health care plan, tax hikes and some other policies will only serve to make worse a recession that is flat out coming to hit us hard over the next few years. That said Barock is worse, he want to tax more, spend more and make government even bigger and more intrusive then Hillary. However he can speak very well, avoids the issues and is very likable. This is why Hillary is in trouble, even her supporters realize Barock is going to be harder for any Republican to beat and are picking the best candidate to win in November.
I personally think Hillary is unelectable and if she looses the primary (which I predict) Barock is probably a 2 to 1 favorite just in odds to win the presidency. In other words a Hillary loss in the primaries is bad for the republicans while her victory would be very good indeed for them.
My predictions for the Democrats in New Hampshire are as follows.
1. Barock wins by at least 10% of the vote and we hear all the liberal papers cheer how it is finally time, “for an African American president”. When the country has been “ready” for a long time and we are all really tired of being called racists in subversive ways by the communists running our press.
2. Hillary gets slammed, perhaps even damn near ties with Edwards. This is spun as the “end of Hillary by the right” and some how a “right wing conspiracy” or “anti women” thing by the left. The left leaning media will hold out all hope for Hillary and talk about how New Hampshire and Iowa “don’t really matter”. Of course they really don’t it is just that the media just spent the last 30 days convincing us how much they do indeed matter.
3. Edwards does ok in 3rd but the media talks about how that is “hope for his campaign” even though there are only four Democrats in the race. Idiots.
4. Bill Richards gets a clue and drops out.
So what are you up to in 2008? What do you think of our coming elections?
Filed under Politics | Comment (0)Double your money in the metal market with no investment
Ok, hold on, don’t get to excited. Indeed I am going to tell you exactly how to get an almost immediate 2 fold return on your money. I am also going to show you how to do it with out spending any money, hiring a broker or even with out doing any paperwork. However, I have to tell you right up front you are not going to get rich with this technique.
In fact this technique is first and foremost fun to do, second it is designed again to program you mind in how you think about words like “money” and “value” and finally last it is about actually making/investing money.
Now that big lump to the left is a chunk of raw copper. Copper has skyrocketed in both price and demand over the last ten years. Copper is used in countless industrial activities and as countries like China, Indonesia and India continue to modernize the demand will continue to grow and often to out pace production capacity. This issue will be compounded by the boom in coal, gold and silver. Consider that you are a mining company and you are choosing where to go and what to do next. You can either mine coal which is far easier then any metal or you can mine silver or gold which is worth far more then copper. Or last you can mine copper which is profitable but if you had the option what would you mine?
Great! So how does this help you double your money with out spending it? The answer is in the humble penny. Currently and since mid 1982 all U.S. pennies are made from mostly zinc with a copper cladding, basically a zinc coin with a very thin layer of copper on the outside. Such pennies are worth damn near nothing from a metal stand point. However, any penny that is older then 1982 is 95% copper and 5% zinc alloy. What does this mean? Let’s do some math.
Step one - When you look at pennies that are made from 1981 back they are heavier then today’s. In fact there are 146 pennies to a pound. Yet we must consider that such pennies are only 95% copper so 1.05 x 146 = 154 pennies make one pound of pure copper.
Step Two - 154 pennies even those from 1981 back are “worth” in currency a whopping $1.54
Step Three - Copper is currently trading at the time of this writing for $2.84 per pound. Hence 154 pennies are “worth” $2.84 in raw copper and copper is a commodity you can actually sell it for very close to the current spot price.
Step Four - Calculation of our return by simply dropping an 1981 or earlier penny into a “special” jar or container is as follows. $2.84 - $1.54 = $1.30 of “profit”. Now take you profit of $1.30 and devide it by your “initial investment” of $1.54 and you have a “instant return of investment” of 84%. Not quite double but as soon as copper goes back over 3 dollars a pound (which analysts believe will be quite soon) and you are at a full 100% return.
We should also consider that copper was trading for about 60-70 cents just 20 years ago and you start to realize just how high your “return” can be if you just start tossing all you pre 82 pennies into a jar for the next twenty years.
This is a great project for adults and kids alike. The bad news is again you are never going to get rich with this and in fact copper will have to go up to say 6 bucks a pound before you will really be able to “cash in” pennies in any real volume. The good news though is there is no doubt that over the years that will happen and because we are talking pennies not many people are making an effort to store away copper pennies.
In 1959 the U.S. stopped making the “wheat cent” and while most of those have been horded away by collectors from 1959 to 1981 100% of pennies produced in the US are 95% copper and virtually no one have really collectively valued them at anything more then one cent. That is 22 years worth of pennies still traveling around in circulation which means their are hundreds of millions of these pennies out there being spent every day. I always drop my pre 82 pennies in a jar and about 1 out of 5 tend to be pre 81’s. Over the years that is a lot of pennies.
So why do this? I mean save 4 dollars a month this way and you make about 4 in return and you have another 400 fricken pennies to deal with right? Short sighted my friend, the key is you don’t do very much to earn that return and most people are making less on their interest bearing savings accounts a month in America. All you do is follow my advice and “spend cash” and each day go through your pennies and drop any 81 or earlier examples into some special container. How much easier can “investing” be?
Just consider if in 10 years you had 15,400 pennies or $154 bucks. Those pennies if copper is at 6 bucks by then will be worth about get this, 600 dollars. Retirement money? Heck no! Just another little store house of money. Additionally while I never get to concerned with numismatic value because of how highly subjective it is there is another opportunity here.
See first let me warn you if you are currently thinking of buying 200,000 or so pennies from a bank, sorting them out and melting the older ones don’t do it! The U.S. Government will frown on that and possibly make you wear some silver bracelets and break a few rocks for a few years. Such activity is illegal for now anyway. Yet as copper keeps going up (and it will) sooner or later the mint will begin to “retire” the old copper. That is a nice way to say they will take the pennies out of circulation and harvest the copper for use. Of course the government is free to do that. This will make a lot of these 60s ad 70s pennies harder to come buy and add some numasmatic value to them as well.
That is many years into the future but let me ask you this. How cool would it have been if say your grandfather started collecting 1964 and earlier silver dimes for you when we stopped making them in 65? For about 10 good years it was easy to pluck silver quarters, dimes and half dollars from circulation. Today it is very rare to find one. I happen to own a huge pile of such coins put away for me by a very smart grandparent. This led to my love of silver in the first place. Today we have the opportunity to start doing something like that for our children, their children and possibly their children’s children. What would 100,000 Indian head pennies be worth today?
There is more at work here though tied to the production of pennies and the metal price. Do you know why 1982 was the year that the penny changed to a zinc core? In the early 80s all metal prices spiked for a while and even then a penny was worth more as copper then as a penny! So zinc was a cheap alternative and coating it in copper kept the penny looking like well, “a penny”.
Today though even zinc is rising in price and it costs about 8/10ths of a cent in raw metal to make a penny. That is before production costs, etc. This means the US Mint is Loosing Money to make pennies. Additionaly so long as people spend cash we can’t get rid of the penny we have to have something in order to make change of a dollar with. I predict therefore that the days of the humble Lincoln cent are numbered! The easy solution is to come up with coin made of something perhaps even cheaper then zinc and make it smaller too.
Since no vending machines take pennies there is no problem with changing the size of the penny. Don’t think it can’t happen either, they did it with the dollar coin. When sooner or later this change occurs it will be another numismatic bump in the value of all pennies and even more so to the all copper variety. So I encourage you to take the phrase, “save your pennies” with a new vision. Start plucking the little copper disks from circulation today and just put them away.
Filed under Personal & Home | Comments (3)