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Old 02-06-2008, 08:39 AM   #21
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I'm going to start working on possible refinance and pay down on the house to eliminate the PMI. We only had hesitated about the refinance since we don't consider this place to be long term permanent and the reading I have done seemed to suggest that a refinance takes awhile to pay off from an interest saved stand point. Although I have noticed some posts about no closing refinances but then I'm not sure how much lower the rate would be. Will research it.

I agree actually that it still seems we could eliminate some of the general spending I allow for. I also think part of the problem is while I purchase most of our food at Wal-Mart other non foods are most always included. I am going to start separating things out at check out and pay for them separately for easier documention. Everybody will love me for that!

I also am bothered by our fast food spending and would like to get that down lower then it is.
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Old 02-06-2008, 10:42 AM   #22
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> I also am bothered by our fast food spending and would like to get that down lower then it is.

You should watch that for health, not just money savings.

How much is your PMI? You don't need to refinance to cancel that, but your lender may require either a broker price option (they call a broker and ask the broker to figure out what they could sell the house for), an automated appraisal (they pull comps for the neighborhood) or a full appraisal. All of these have some cost associated with them, but the payback is pretty quick, especially if you're paying $$$ for the PMI. Another option would be to see if they'd lower PMI. We were paying $150 PMI when we were at 8% equity and then $50 in PMI when we were up to 15% equity.

You should come up with another budget that reflects your bare-bones 'husband jsut got fired for punching the CEO' monthly budget. for instance, I'm guessing you'd be willing to not eat out if that was the case, and you probably wouldn't drive as much.

Is the 62K in savings your emergency savings account? It looks like, if your bare-bones budget is $7k a month, then you have almost 9 months built up (assuming no catastrophic event). Not bad at all! You two might want to talk through possible scenarios if you actually needed to use that money... do you look for a job right away, look at other options, etc.

On the investment front, as Steve pointed out, that stable value isn't doing you a lot of good. On the one hand, you don't risk losing money (assuming it stays ahead of inflation). On the other hand, you don't stand to gain any money. And then, on the other side of it, a significant portion of your investments are tied up in company stock. Your husband is exposed to significant risk there, theoretically, because if something bad happens to the company then he might lose his job and all of his stock might lose it's value.

It does look like maybe the move to stable value was the result of moving money out of the company stock?

If you have the time and inclination, I would start reading the Diehards forum (Diehards.org). You'll start to learn a lot more about investing.

What investment options are available to your husband? Can he contribute more to his 401k or is he capped where he's at? At $1,100 a month he's not coming close to either the max or the catch-up amount. You look to have $2k extra a month in your budget so, theoretically, he should look at contributing more if possible. I know you mentioned that

another thing to consider would be moving the money out of the company stock (keep some but maybe not nearly that much) and out of the stable value and putting it in a target retirement account. Highly dependant on what investment options are available to you, but it would allow you to better adjust for your goals.

Lastly, how realistic is that budget? That is, your budget shows that you have $2k left over every month. Do you?

It sounds like the two college kids are fairly set... if you're helping them with schooling, is it part of your budget?

Is college savings important for the 6 year old?

If you go back to work, or school, one thing to consider would be child care costs for your youngest (plus, is it worth it if you want to spend afternoons with them?)

Is college savings important for your youngest? If so, better put that in the budget.

You mentioned that, in the past, the bonus went towards cc debt and car debt. What about the future?

You mentioned that you have $1k in Fidelity and weren't quite sure how to proceed.

One thing my wife and I did was to start twice-monthly contributions into two index funds. We invest in the total stock market index with Vanguard and then an international index fund with dodge and cox. Our 401ks are in a mix of bond funds and stock funds with an overall goal of 75% stock / 25% bond and a mix of us and international large and small cap. There is no perfect portfolio, just one constructed around what you feel your goals and risk tolerance are.

If you have the extra money, it's time to get it in the market.
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Old 02-06-2008, 12:43 PM   #23
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In your first post you mentioned 4 cars,you could probably save some additional money for retirement if you downsized in the transportation dept.
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Old 02-06-2008, 02:37 PM   #24
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Originally Posted by Marquette View Post
> I also am bothered by our fast food spending and would like to get that down lower then it is.

You should watch that for health, not just money savings.

Yes true. We are pretty careful fast food eaters. I'm an obsessive calorie counter, write down every thing that I eat. That along with walking 5 times a week helped me go from a size 12 to a 4 three yrs ago.

How much is your PMI? You don't need to refinance to cancel that, but your lender may require either a broker price option (they call a broker and ask the broker to figure out what they could sell the house for), an automated appraisal (they pull comps for the neighborhood) or a full appraisal. All of these have some cost associated with them, but the payback is pretty quick, especially if you're paying $$$ for the PMI. Another option would be to see if they'd lower PMI. We were paying $150 PMI when we were at 8% equity and then $50 in PMI when we were up to 15% equity.

I recently requested a cancellation review. The letter states we need to have 75% equity or an appraisal showing it has increased in value that much. Not. PMI is 143 per month. Prior I had called and spoke to someone who said all that could be done was to request the cancellation via the web site. There was nobody I could speak with about it. CountryWide is who the mortgage is with.

You should come up with another budget that reflects your bare-bones 'husband jsut got fired for punching the CEO' monthly budget. for instance, I'm guessing you'd be willing to not eat out if that was the case, and you probably wouldn't drive as much.

Our current plan for that is to retire in Thailand and live in a hut.


Is the 62K in savings your emergency savings account? It looks like, if your bare-bones budget is $7k a month, then you have almost 9 months built up (assuming no catastrophic event). Not bad at all! You two might want to talk through possible scenarios if you actually needed to use that money... do you look for a job right away, look at other options, etc.

Yes it is in a savings account online which is at what 3.6% now? Not very good at all with the recent cuts.

On the investment front, as Steve pointed out, that stable value isn't doing you a lot of good. On the one hand, you don't risk losing money (assuming it stays ahead of inflation). On the other hand, you don't stand to gain any money. And then, on the other side of it, a significant portion of your investments are tied up in company stock. Your husband is exposed to significant risk there, theoretically, because if something bad happens to the company then he might lose his job and all of his stock might lose it's value.

This is a area I would really appreciate help with. I used to have the 401K divided among many different things. It seemed like everything only lost money. So that is why I ended up moving to the value fund. At least wasn't loosing. Within the last 6mnths or so the 401K plan added the LifePath Portfolios in addition to the Stable Value, Inter. Bond Fund, Large, Small and non US Equity Funds,and the company stock. Everything besides the bonds and company stock seems to always be in the red. Am I just expecting to much in say a year. How do you know when to say this needs to be dumped its not going to get any better?

Also there is now an option to roll over the money in the 401K to Hewitt Financial Brokerage. Maybe there would be better choices there?

It does look like maybe the move to stable value was the result of moving money out of the company stock?

If you have the time and inclination, I would start reading the Diehards forum (Diehards.org). You'll start to learn a lot more about investing.

Yes I have done some browsing around over there already.

What investment options are available to your husband? Can he contribute more to his 401k or is he capped where he's at? At $1,100 a month he's not coming close to either the max or the catch-up amount. You look to have $2k extra a month in your budget so, theoretically, he should look at contributing more if possible. I know you mentioned that another thing to consider would be moving the money out of the company stock (keep some but maybe not nearly that much) and out of the stable value and putting it in a target retirement account. Highly dependant on what investment options are available to you, but it would allow you to better adjust for your goals.

We contribute 6%. The match is 5%. No Cap. Always heard not to contribute more then the match. I figured if we just save that extra outside the 401K we could maybe do better investing it on our own.

Lastly, how realistic is that budget? That is, your budget shows that you have $2k left over every month. Do you?

Yes we do have that for the most part. I keep at least 1K in checking at all times and transfer the rest to the savings.

It sounds like the two college kids are fairly set... if you're helping them with schooling, is it part of your budget?

Helping them every semester eliminates what goes into savings for a period of time around then.

Is college savings important for the 6 year old?

Not Worried about that considering the other things we need to gain right now. I'm ok with him taking out loans if it comes to that.

If you go back to work, or school, one thing to consider would be child care costs for your youngest (plus, is it worth it if you want to spend afternoons with them?)

Is college savings important for your youngest? If so, better put that in the budget.

You mentioned that, in the past, the bonus went towards cc debt and car debt. What about the future?

Exactly why I sought out this forum. Everything now goes into savings until I am educated enough to move it. Guess some of it is going to pay down the mortgage which I know makes since but I get such a rush from logging into my savings and looking at the money there. I know it is peanuts in the big picture but it is the most cash on hand I personally have every had and I like it! Hard to see it go down a little.

You mentioned that you have $1k in Fidelity and weren't quite sure how to proceed.

One thing my wife and I did was to start twice-monthly contributions into two index funds. We invest in the total stock market index with Vanguard and then an international index fund with dodge and cox. Our 401ks are in a mix of bond funds and stock funds with an overall goal of 75% stock / 25% bond and a mix of us and international large and small cap. There is no perfect portfolio, just one constructed around what you feel your goals and risk tolerance are.

If you have the extra money, it's time to get it in the market.
Thanks for you input!
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Old 02-06-2008, 02:49 PM   #25
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In your first post you mentioned 4 cars,you could probably save some additional money for retirement if you downsized in the transportation dept.
Everybody needs a car, not really an option. Both kids in college drive 60 miles round trip to campus and work part time jobs. Husband needs to get to work. I need to get the little one around and do errands.
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Old 02-06-2008, 07:55 PM   #26
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http://www.ftc.gov/bcp/conline/pubs/alerts/pmialrt.shtm

"Your PMI also can be canceled, when you request - with certain exceptions - when you reach 20 percent equity in your home based on the original property value, if your mortgage payments are current."
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Old 02-06-2008, 11:38 PM   #27
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TiredinTX,

At this point, if I were in your shoes, I would think about putting extra money on that mortgage at least to the point of being able to cancel your PMI. Paying for PMI doesn't benefit you at all. You should run the numbers for a refi... it may or may not be worth pulling some money out of savings to get to an 80% ltv if you do refinance.

After that, while I'm not a huge fan of financial advisors (I take that back.. I don't mind fee-only or independents.. my Ameriprise experience scarred me for life), I think one might be appropriate in your situation. Plan on some good heart-to-hearts about goals and objectives with your husband beforehand and then come up with a strategy with your advisor.
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Old 02-07-2008, 09:27 AM   #28
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Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year

"Your PMI also can be canceled, when you request - with certain exceptions - when you reach 20 percent equity in your home based on the original property value, if your mortgage payments are current."

Thank You! Printed. Indicates I have to be provided a # to speak to somebody via phone.
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Old 02-07-2008, 09:30 AM   #29
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TiredinTX,

At this point, if I were in your shoes, I would think about putting extra money on that mortgage at least to the point of being able to cancel your PMI. Paying for PMI doesn't benefit you at all. You should run the numbers for a refi... it may or may not be worth pulling some money out of savings to get to an 80% ltv if you do refinance.

After that, while I'm not a huge fan of financial advisors (I take that back.. I don't mind fee-only or independents.. my Ameriprise experience scarred me for life), I think one might be appropriate in your situation. Plan on some good heart-to-hearts about goals and objectives with your husband beforehand and then come up with a strategy with your advisor.
Did some reading on the other threads and noticed there was a hot deal with Penfed recently on refinancing. Also found a link to a calculator so I can run the numbers.
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Old 02-07-2008, 09:52 AM   #30
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welcome to the forum. there are lot of educated people on this forum and I am learning a lot! good luck!
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