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Old 12-13-2013, 05:56 PM   #121
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Thanks for the advice. Soon I will be raking in the big $$'s thanks to PenFed and all this good advice.

Sue J, you are a legend in your own time. I can see the headlines now in the Wall Street Journal:

Sue J single handedly responsible for dramatic income rise in retired population.

Web poster adds hundreds of thousands of dollars to retirees' net worth.
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Old 12-13-2013, 06:25 PM   #122
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Originally Posted by Chuckanut View Post
....

Sue J single handedly responsible for dramatic income rise in retired population.

Web poster adds hundreds of thousands of dollars to retirees' net worth.
Hundreds of thousands? You mean in the retirees as a group or are those retirees choking horses with the roll of bills they are putting into certificates?

Now here's something I'm considering: Let's say I have a $100k 5/5 mortgage on my house that I took out with PenFed 1.5 years ago. The interest rate on that is 3%.

PenFed is offering their current no cost 5/5 home loan for 2.625%, though there are extra hoops a current PenFed mortgage holder has to jump through (middle of last year you had to borrow $50k more than the current loan and the new loan had to be 80% LTV). If one could meet PenFed's conditions for a 5/5 loan is there any reason NOT to make a new 5/5 loan, paying less interest than one is making on the certificates and moving the payoff date out another year or so? $375 interest savings/$100k/year?
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Old 12-13-2013, 06:36 PM   #123
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No, I am completely serious. As soon as Sue said it was PenFed who had 5yr CD for 3%, I called them although I thought you had to have been in the military or something similar.

When I said I am not sure if I belong to any organization, one thing the rep asked me was exactly that (If I ever donated blood for Red Cross), as well as if I have donated money to Red Cross (which I have done in the past, so I said I had donated money to Red Cross in the past). I asked if I needed to produce the receipt (which would have taken me time since I used my mileage on the card that I have already closed to do the donation), she said No. Even if you haven't done either of these things, I think the rep said all you had to do was to pay $15 to become a member. (I could be wrong, but in the old days, they had tigher restrictions on who can become a member...)
All I had to say when I opened the membership account a few years ago (thanks to this forum) was "my father was in the Korean war".

My response was to the customer service rep asking me if anyone in my family was military or had served in the military.
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Old 12-13-2013, 06:46 PM   #124
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All I had to say when I opened the membership account a few years ago (thanks to this forum) was "my father was in the Korean war".

My response was to the customer service rep asking me if anyone in my family was military or had served in the military.
They must have eased up - my Navy service during the Vietnam unpleasantness didn't qualify me, but a contribution to the Military Families group did.
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Old 12-13-2013, 07:00 PM   #125
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They must have eased up - my Navy service during the Vietnam unpleasantness didn't qualify me, but a contribution to the Military Families group did.
I just checked my original paperwork and I opened the Share Account in October of 2009. So either they have eased up as you said calmloki or the financial crisis had them relaxing their criteria at that time. Hard to imagine with your Navy service, you had to make an additional contribution.
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Old 12-13-2013, 08:18 PM   #126
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Hundreds of thousands? You mean in the retirees as a group or are those retirees choking horses with the roll of bills they are putting into certificates?

Now here's something I'm considering: Let's say I have a $100k 5/5 mortgage on my house that I took out with PenFed 1.5 years ago. The interest rate on that is 3%.

PenFed is offering their current no cost 5/5 home loan for 2.625%, though there are extra hoops a current PenFed mortgage holder has to jump through (middle of last year you had to borrow $50k more than the current loan and the new loan had to be 80% LTV). If one could meet PenFed's conditions for a 5/5 loan is there any reason NOT to make a new 5/5 loan, paying less interest than one is making on the certificates and moving the payoff date out another year or so? $375 interest savings/$100k/year?
It would certainly be hard to hurt yourself this way. One thing you would want to be careful of is effective tax rates. If the 3% is taxed but the mortgage isn't fully deductible due to the standard deduction being bigger than the amount of the extra interest, this does not work.
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Old 12-13-2013, 09:07 PM   #127
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Gee, look at our excitement over 3% for 5 years! The thought of interest on savings staying below 3% for five more years is rather depressing. Unless it also means inflation stays low too.

Amethyst
To me it isn't the yield, which is good but not great, but it is no interest rate risk and no credit risk that make these attractive. My hope is that interest rates have normalized in 3-5 years. For me, it is the first CD that I have ever bought.
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Old 12-14-2013, 05:18 AM   #128
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To me it isn't the yield, which is good but not great, but it is no interest rate risk and no credit risk that make these attractive. My hope is that interest rates have normalized in 3-5 years. For me, it is the first CD that I have ever bought.
Right - I am comparing this to high-quality intermediate bond funds many of which are yielding less than 3% right now.

And who knows where interest rates will be in 3-5 years. I know lots of people think they know for certain, but there are lots of different pressures on the economy and deflation is still a threat. If interest rates go down or stay the same, you are ahead. If interest rates do normalize in a few years, then you have some new options.
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Thanks Sue J
Old 12-14-2013, 10:40 AM   #129
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Thanks Sue J

I just opened my first Penfed account and added a CD. Thanks, Sue for the initial post. And others for your information regarding the CD.
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Old 12-14-2013, 12:25 PM   #130
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Earl, I do like your name. Very Creative.

Yes, Sue is a financial guru, who I am sure has added thousands, and probably tens of thousands of dollars to the collective wealth of this group.
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Old 12-14-2013, 03:04 PM   #131
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Earl, I do like your name. Very Creative.

Yes, Sue is a financial guru, who I am sure has added thousands, and probably tens of thousands of dollars to the collective wealth of this group.
Ha, if you only knew.....

I'm a lifelong frugal gal who lives by the rule of KISS - Keep It Simple, Sue. Very conservative investor, not wealthy at all, just happy to have enough.
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CD question
Old 12-14-2013, 04:24 PM   #132
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CD question

Seasons greetings to all. I have a question concerning regarding some CDs I currently own. These CDs were originally 60 month CDs with a 120 day penalty for breaking the contract. The rate is 2%. There's 47 months remaining. It seems like breaking these CDs & buying new 60 month penfed CDs makes sense. But then again if rates are 4% on a 60 month this time next year I'd be locked into CDs that have a 365 day penalty instead of the 120 day penalty I have now. Any opinions on this?
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Old 12-14-2013, 05:19 PM   #133
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Seasons greetings to all. I have a question concerning regarding some CDs I currently own. These CDs were originally 60 month CDs with a 120 day penalty for breaking the contract. The rate is 2%. There's 47 months remaining. It seems like breaking these CDs & buying new 60 month penfed CDs makes sense. But then again if rates are 4% on a 60 month this time next year I'd be locked into CDs that have a 365 day penalty instead of the 120 day penalty I have now. Any opinions on this?
These are separate and distinct issues. We have no idea what future rates will be, so the only question you can answer is whether it is worth giving p 1% of your current CD for what pen fed offers. Looks like a no-brainer to me. If and when rates move up in the future you will have to answer the same question except that the cost to switch will be 3%.
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Old 12-14-2013, 05:30 PM   #134
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CDs

Thanks brewer.
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Old 12-14-2013, 08:48 PM   #135
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These are separate and distinct issues. We have no idea what future rates will be, so the only question you can answer is whether it is worth giving p 1% of your current CD for what pen fed offers. Looks like a no-brainer to me. If and when rates move up in the future you will have to answer the same question except that the cost to switch will be 3%.
+1 looks to me that after ~1 year you are even. If you stay, your $100 will be $102 a year from now. If you leave you'll have $99.33 invested ($100 - .66 withdrawal penalty) which a year later at 3% will be $102.31.
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Old 12-15-2013, 01:39 AM   #136
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Tried to set up an account tonight online, but first message was to call them. They're either flooded with enthusiasts and/or they're ready to shut this down. Too late to call now.
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Old 12-15-2013, 03:49 AM   #137
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Tried to set up an account tonight online, but first message was to call them. They're either flooded with enthusiasts and/or they're ready to shut this down. Too late to call now.
Try a different browser.
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Old 12-16-2013, 02:52 PM   #138
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Called Penfed today to see how long this offer might last. They said it should be good to the end of the month....of course they could change at any time.

I plan to do a rollover from my 401k to Penfed, but Fidelity will only mail a check to my address on file. Penfed said they can initiate the rollover, but I think I have time to wait for a check to be mailed.
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Old 12-16-2013, 05:27 PM   #139
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Added a small one. I was going to take advantage of the 3 years 2% but 5 year 3% seems like a better. I may add more once I finish tax loss selling.

I still haven't figured out how Penfed makes money. I have 50K (now 45K) 6 year car loan at 1.74% and approximately twice that much in CD maturing between June 2014 and Jan 2021 at interest rates ranging from 3% to 5%
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Old 12-16-2013, 05:35 PM   #140
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That ACH system is pretty slick & instantaneous. I'm on the penfed party train. If the economy picks up more speed in 2014 that 3% cd may get redeemed sooner rather than later.
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