grasshopper
Wax on Wax off.....
- Location
- Cocoa FL
Is ING best for this setup? Is it easy to access the accounts? Do you have a debit card for them? I want to establish a system like this for myself.
Dave Ramsey, debt, credit cards, retirement, etc
- Thread starter SuperJETT
- Start date
douglee25
m3booooy
- Location
- South Jersey
The good thing about ING is that they pay a 'decent' amount of interest on savings IMRC. Your local banks probably won't come close. ING does offer debit card transactions too with their Electric Organge account (includes checking, debit withdrawals, bill pay) but their interest rate is only like 0.5% for under $50k balance. Their savings yield is 2.5% regardless of balance but you don't have access to that money quickly (2-3 day withdrawals).
Doug
freestylegeek
waiting...
- Location
- Grand Rapids, MI
That's the hardest and the easiest step!
Easiest beacause it's only $1000 (only is relative)
Hardest because your making a comitment to DO this thing - a comitment you will NOT regret!!
BTW, I read "The Total Money Makeover" as my fist book of the year, and I set a new record this year. I read it in about 2-1/2 hours last Saturday (that's just the book part - no testimonials). Every time I've read it, I've been at a different baby step, and it reads differently every time!
grasshopper
Wax on Wax off.....
- Location
- Cocoa FL
I am anxious to get started should have the $1000 soon!
oxnard111
Creative RE Purchasing
- Location
- so Cali, Ventura/Oxnard area
without reading any books, and not reading through this whole thread, I was wondering if I could get some advice...
My wife and I have our emergency fund already set up... We have 10% of a down payment already saved for a house in our price range (now just waiting a few more months for prices to drop and our current lease to expire). Now that we have the down payment we we can use that amount of monthly income to put toward paying off loans.
We have two cars at
$10,000 - 5.9%
$8,000 - 5.9%
She has a bunch of school loans that have not been consolidated so we are able to pay off individual loans. The only one of her school loans that is over the 5.9% of our cars is a loan for $5600 at 8.0%.
My father-in-law suggested that we pay off the car loans first even though they are at a smaller percentage than the school loan. His rational is that when we go to get pre-approved for a house, that the lender will look more kindly on school loans as compared to the car loans... Is there any truth to this? I have tried some basic research through google, but haven't found a good answer.
Which loans should be attack first?
My wife and I have our emergency fund already set up... We have 10% of a down payment already saved for a house in our price range (now just waiting a few more months for prices to drop and our current lease to expire). Now that we have the down payment we we can use that amount of monthly income to put toward paying off loans.
We have two cars at
$10,000 - 5.9%
$8,000 - 5.9%
She has a bunch of school loans that have not been consolidated so we are able to pay off individual loans. The only one of her school loans that is over the 5.9% of our cars is a loan for $5600 at 8.0%.
My father-in-law suggested that we pay off the car loans first even though they are at a smaller percentage than the school loan. His rational is that when we go to get pre-approved for a house, that the lender will look more kindly on school loans as compared to the car loans... Is there any truth to this? I have tried some basic research through google, but haven't found a good answer.
Which loans should be attack first?
I am not an expert, but I believe the answer is no -- car loans are secured. The existing lenders can repossess your cars and recover all or most their assets without further action against you. Student loans are unsecured, therefore harder for the existing lender to recover should you default.
For the simple answer that I think you want to hear: the smallest balance first, minimum on everything else, and attack that small one, then move to the next smallest.
However, how much interest are you earning on that 10% downpayment? More than you're paying in interest on the loans? If you're earning 3% while paying 6-8% on loans, you're losing money overall. I'd take that money and kill the loans first, then save up 20% for a 15 year mortgage.
However, how much interest are you earning on that 10% downpayment? More than you're paying in interest on the loans? If you're earning 3% while paying 6-8% on loans, you're losing money overall. I'd take that money and kill the loans first, then save up 20% for a 15 year mortgage.
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ING was the best option available in Canada at the time I started it. There is no minum amount for any account (some had a $1000 minimum), and I earn 2.7% (this varies with the Prime Rate). It is very easy to access the accounts, there is a 2-3 day hold on the money though. There are no deposit or withdrawl fees, and you can set up automatic deposits with a few clicks. My account is subdivided into 5 separate accounts (ie - 5 'envelopes', but I only have one login id/password). It may be worth doing some research on the options available in the US, but I'm very happy with ING.
If you use the Orange Key 17436142S1 when you sign up, you will get $13 free dollars.
oxnard111
Creative RE Purchasing
- Location
- so Cali, Ventura/Oxnard area
only 3%, but what about taking into account wanting to buy a house? I am just throwing away money with rent, and plan on buying within the next 6 months.
Think about it this way: (hypothetical numbers loosely based on what you posted)
$25,000 - 10% saved for house, earning 3%
$35,000 - debt, average of 7% interest overall
In one month, you'll earn $62.50 on your down payment, but pay out $204.17 in interest on your debt.
Your net worth is going down by $141.67 each month based on those 2 items.
Also, putting 10% down is going to require you to pay PMI on the mortgage, probably at least $100/month. 20% is better.
And don't go get a HELOC for the other 10% so you don't have to pay PMI, the interest you pay will be way higher than the PMI would be.
I agree, you may want to buy a house, but from what you've posted, you're not ready yet. List all your incomes, expenses, and savings and it may be easier to tell.
oxnard111
Creative RE Purchasing
- Location
- so Cali, Ventura/Oxnard area
I will totally take what you all have said into consideration. I totally understand what you guys are saying... Though if I wait say 4-8 more years until all my debts are paid off, the housing market could be and will probably be fully inflated again. Right now in southern california it is the time to buy. House prices are almost what they were 12 years ago. If I wait I could screw myself and have to a buy a house for $600,000 that right now is $225,000. Owning a house will also give me more disposable income due to lower income taxes, and my mortgage will be hundreds of dollars less a month than I am paying in rent now.
And I am not saying what you guys have recommended is not what I will do, I just have some more thinking and things to consider.
And I am not saying what you guys have recommended is not what I will do, I just have some more thinking and things to consider.
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douglee25
m3booooy
- Location
- South Jersey
Yeah, I agree with Darin. Everything is a compromise. If you make decent money and your job is relatively secure, there's nothing wrong with some debt per say, as long as you have a pay down plan and stick to it. Not everyone becomes debt free over night.
Doug
Doug
oxnard111
Creative RE Purchasing
- Location
- so Cali, Ventura/Oxnard area
yes, yes it does.
One thing about these statements, you're wanting to act now out of fear.
What if the market has corrected and stays that way?
What if you/your wife/both lose your jobs this year?
EDIT: how cool that I got post #1000 on this thread
There are tons of what-ifs to consider. Make sure you plan ahead.
I do know the market is way different there than here, and rental prices are way different too, so just make an informed decision, have a plan, and stick to it.
Oh, and pay off those debts!!!