December 24, 2009
I figured I would get it out of the way early this year. Usually I am Mr. Responsible; I buy the right sized house, a used affordable car, pay my bills on time and generally don’t splurge on luxury items. 2010 is going to be a little different, after having a good 2009 and really starting to balance out this whole homeowner thing I find myself needing (read: wanting) a new cell phone.
Oh not any phone, I must have a smart phone. Oh not any smart phone I must the most expensive and most advanced phone out there. I must have the Iphone.
The Iphone is of course the culmination of everything that Apple does well; it’s a computer, Ipod, and phone all tucked into a tiny device that actually works quite well. You can surf, listen, or talk on this expensive device.
Now I am pretty responsible and I have been hearing lots about prepaid cell phones in the blogosphere. They are cheap to purchase and easily replaceable. They require no contract, are pay as you go, and really only make calls. I would highly suggest this type of phone for my grandparents or someone who has limited monthly usage.
So let’s do some cost comparison here:
Cost Monthly cost Termination cost.
Iphone $200 $90 $250
Prepaid $40 $40 $0
So over a 2 year period:
Prepaid cost: $1000
Iphone cost: $2360
That is actually not as bad I was expecting, the Iphone would cost around 2.5 times more then a prepaid barebones phone would over the 2 year contract period. Figuring in the benefit of web-browsing, email, texting I would say that the value received by those extra services probably about equals the cost difference of these phones.
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Expenses, Liabilities | 
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Posted by fubar1383
September 18, 2009
This is a chart representing the amount of debt that the Federal Government of the United States of America is responsible for. This number just under 13 Trillion dollars! To most people trillion is not a word that we say very often, it even sounds a little made up. “I am so hungry I could eat a trillion hotdogs!” see this is funny stuff.
To break it down a little bit more this debt is held by the U.S. Government and therefore by the taxpayers of the Untied States. So if we do that math of 13 Trillion divided by 300 million or so Americans, your share comes out to be around $43,000!
What would you do with $40,000 in debt? That is a serious chunk of change. I probably would be on a diet of Ramen noodles and Water for the next 10 years or so. This enormous debt held by the federal government is starting to worry me.
Inflation
Does anyone realize what (serious) inflation can do? It can wipe out 30 years of hard earned savings in a year or less. To me it would feel like someone robbed my bank and took all my money. Say you have $40,000 in the bank but the government starts printing money to fulfill its debt obligations. All that is going to happen is cause dollars to be worth less and less. Maybe in one year your 40,000 could only buy what 20,000 could a year ago. Then the year after that 10,000, then maybe only 5,000;
So after a while all the cash you had is pretty much worthless and the government introduces a new type of dollar bill:
(This is a real note, and the direct result of what happens when governments print money)
Inflation on this scale is a scary and very real possibility. I worry that our government (democrat and republican) is unwilling to stop its spending binge, and some painful inflation is all but inevitable. I would encourage everyone to hedge against inflation. The best way to do this is to buy “hard” assets such as gold and oil, foreign currencies like pounds, yen, or Euros even stocks and real-estate offer some protection against inflation.
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Posted by fubar1383
September 11, 2009
So I have been having a disagreement with Chase that can be found Here
I have been emailing them and calling them and it is getting to the point where it might not be worth it to fight them a whole lot more over $39 bucks. But I figured with my current success with negotiating with my plumber I figured I would give it a try.
They only will accept disputes via snail mail or fax. So here is my letter.
Subject: Disputed Returned Payment Fee
To Whom It May Concern:
As stated above I would like to dispute the $39 fee added to my account on June 22nd 2009 due to a returned payment.
The reason I am disputing this fee is because I do not believe that it is a fair charge. I simply made an error while entering my banking information on the Chase’s website. I feel that this is a very easy mistake to make, and I should not be penalized for trying to make payments online that are easier for me to send and you to receive.
Please remove this charge from my account, if you do not I see no reason for me to continue to do business with Chase Bank.
Thank you
-Jon Bon
We will have to wait and see what happens. I am pretty positive that after I pay off this 0% credit card that I will cease all business with Chase. If they choose to treat me poorly I am free not to give them my business.
2 Comments | Banking, Credit, Liabilities | Permalink
Posted by fubar1383
August 14, 2009
This is a great movie based on the novel by Steven King if you have ever seen the movie you know what I mean, if you haven’t; well this is how it goes.
Andy, a wrongly convicted man goes to jail in the 1940’s and gets to experience all the wonderful things about prison. He eventually ends up running a scam for the warden, and then escaping thought the use of his rock hammer. His rock ‘hammer’ probably would fit in the palm of your hand, and it takes him 20 years to tunnel thru his wall to freedom. The way he did it was slowly and meticulously. There are very few things that I have be doing for 20 years other then eating and sleeping. I can not imagine being focused on something that intensely for that long.
Tunneling out of Shawshank is of course my metaphor for paying off my newly acquired mortgage. I owe somewhere in-between 100-200k on my house. This in itself is not remarkable at all, actually it’s probably very low compared to a lot of people. Why this is a big deal to me is the way that I am paying it off.
I got an excellent mortgage rate (less then 5.5%) and a relatively affordable house. So guess how much I pay down on that mortgage per month?
Around $150.
No I did not forget a zero, or move a decimal. I pay the same for my house per month that I do for my cable TV! The reason for this has to do with the way mortgages work. If you don’t know I highly suggest you look it up. But the short version goes like this:
Early in the life of the loan the payments are 80% interest 20% principal. As you pay down the principal the interested earned by the bank per month becomes lower so after a year maybe your 79/21, after two year your 77/23, after three years 74/26. You notice how the amount paid to interests is lower every year 80, 79, 77. 74? That is the “power of compounding” you can see this power demonstrated dramatically in putting extra towards your payment. If you had a 30 year 150k mortgage at 7% simply paying $100 extra per payment pay your house of seven YEARS earlier.
The math on that is
23 years of paying $100 extra: $27000
Saves you 7 years of mortgage payments: $75000
After my first year I am going to pay more on my mortgage, and try to tunnel out of Shawshank just a little faster…
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Posted by fubar1383
July 9, 2009
So I am pissed off at Chase, we are having a bit of a disagreement.
Here is my message to Chase:
I was setting up direct deposit to make my credit card payment and I omitted a digit. I corrected the situation right away and sent you the money again with the correct banking information. Please remove the fee due to a simple typo.
Thank you
-JonBon
Chase Response:
Dear Jon,
My name is Diana, we understand your concerns regarding the return check fee on your account.
A returned check fee is charged whenever your bank does not honor the check that you gave us to pay on your account. This can occur for a number of reasons. Please contact your bank for details regarding your check.
This fee was assessed to your account because your payment was returned to us unpaid by your financial institution. It is a valid fee and will remain on your account.
Thank you,
Diana
JonBon’s Rebuttal:
Diana
Like I said before I made a typo and entered the wrong number for my account number or routing number. Of course the payment was not honored by the bank, it was not my account. I was attempting to make payments electronically which I am sure for Chase is less expensive then processing a paper check every month. I realize that it is a valid charge, but I think it is unreasonable to charge $39 for a typeo. Please remove the charge.
-JonBon
Chase Response:
Dear Jon,
Thank you for providing me with the opportunity to assist you today, regarding the returned payment fee.
We previously reviewed your account and explained why we could not make the adjustment you requested. Even though you have informed us that this was a typo, the typo was not a bank error. We regret that we are unable to take further action regarding the returned payment fee reflected on your current activity.
At this point I realize they are not going to be nice, and that I am going to have to be a little more forceful.
So I contacted the BBB, BRING IT ON CHASE!
Mrs. Newton
I am sorry to hear that you are unwilling to fulfill my request to refund the unreasonable charges. You have left me no choice but to file a complaint with the Better Business Bureau. The complaint number is 83**** and has been filed to the BBB of Metropolitan New York.
Thank you for your time.
Respectfully
-JonBon
More to come kids!!
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Posted by fubar1383
June 16, 2009
Population: JonBon
I used to be rich, I used to be the guy with money. I used to be the person who took vacations and maxed out their Roth IRA. I used to live in a vault like Scrouge McDuck and swim around in all my money.
But I moved.
I moved into the poor house, with most of my fellow Americans. Now you have to understand my definition of poor, and an economists definition of poor are very different. My net worth is still probably very high for my age, and technically I am doing great. I am just way less liquid then I used to be.
I have accumulated a crazy about of debt in the past 3 months or so. Now most of this is good debt, but its still debt, and I hate debt!!
House:
I purchased a home with 10% down. So I have six figures of mortgage debt that I now have to pay back for 30 years at 5.45 percent. It is a huge adjustment to have tens of thousands sitting in the bank, to tens of thousands sitting in a house. It makes the dollars a little harder to get too. I will get the $8,000 first time home buyers credit, and I will get a place to live, but it’s still hard to go from owing money to no one, to owing the bank well over $100,000! The reason that this debt is good, is becuase it went to purchase an asset that in theory can be sold for more then I paid.
Appliances:
I spent around two grand on some pretty solid stainless steel appliances. I am happy with what I have; they look nice, and work well. These I financed over a year with 0% interest. I did this before with my enormous TV. It’s a way to keep your cash, and pay for them over time. Just a warning, do not miss a single payment, and never be late. The banks that make these uncollateralized loans (GE Money) are not very nice people. The 0% you get it just a teaser, most people do not pay them off in time, and get hit with huge penalties and interest.
Jewelry:
I recently got engaged and financed an expensive diamond, as well as purchased a ring to put it in. I probably spent a lot more then I needed too, and got a diamond that is of much higher quality then most. She would have been happier with less, but its what I wanted her to have. I financed the ring with a zero percent interest for 12 months Chase credit card. Again a warning to you, this is a really stupid way to buy things unless you know that you can make the payments.
2 Comments | Assets, Liabilities, Real Estate | Permalink
Posted by fubar1383
April 10, 2009
Well I officially drive a “six figure car”. No that does not mean my car costs over $100k, it means that I have over one hundred thousand miles on my 2000 Mercury Cougar, and yes her name is Samantha. I still name my car, deal with it!
Now it is not the nicest looking car out there, and yeah it has a few problems that show up with age. But my car only costs me about $40 a month in gas, and $35 a month in insurance. Sure I have to put some money into it every now and then, but it is still loads cheaper then a $350 car payment with pricey insurance.
I told myself that when my car hits 120k I would allow myself to buy a new one. Well with the purchase of the house, looks like that number is going to be pushed into the 150k range. So until then I will just keep on shifting and hoping that my clutch will make it another two years.
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Posted by fubar1383
April 4, 2008
Before I pay credit card interest…….
I have never paid a dime of credit card interest. It’s not overly hard for me, but I am sure it can be for others. I just spent $1000 on a new couch at a furniture store. I had the cash at the time in my checking, but it would have left me at dangerously low fund levels in that account, and I did not want to tap savings. So I charged it, and will pay it off in full when the bill comes.
Which brings me to another point; it would be so tempting for me to pay less then the entire balance off at once. I will be moving and incurring other unforeseen costs that go with moving, so maybe keep my cash reserves high by paying half the balance?
I of course could not would not do that. The introductory interest rates on the majority of credit cards are higher then any other type of loan: car, school or home. You might be able to get a loan off the street for less the some of the rates that are out there. The interest for a single month might only be fifteen bucks or so, not much right? If you do the math on that (15/1000*12) that is 18% interest on the year! With only five bucks put towards the balance. Money in savings accounts is earning well under 3% these days. You do the math on how much it is costing you.
The credit card companies are not bad people (some would disagree) but they want you to pay the minimum balance every month. That way you cover the interest and just a tiny bit of the principal. You would be paying this way for a long time, and making Visa very rich in the process. How else do you think they can afford to blanket consumers with advertisements?
1 Comment | Liabilities | Permalink
Posted by fubar1383
March 18, 2008
1. Credit Cards
Duh…..If you carry a balance on your credit cards, or even worse just pay the minimum, you need to make paying this off priority number one. Interest rates and fees that are charged can really make you bleed cash. Why do you think Visa and MC have so much money to advertise? Pay it down with anything you can, sell that 3rd car you don’t use, cash out a savings bond, or sell your 1st born. Do whatever it takes. After your done put them in a drawer and forget about them.
2. Car
Some would say it is not really necessary to pay off a car loan early because interest rates are traditionally low for qualified buyers, but many people are not a qualified buyer. You have a 7 year loan at 7%. That is too a long a loan, and too high an interest rate. Many people will trade in their car after a few years while still carrying a balance on the old car, and roll that into the new larger loan. It’s a cycle where a person never actually owns the car, and spends thousands on interest.
3. Student Loans
Now we are into ‘good debt’ if such things exist. This kind of debt does not hurt your credit score. Hopefully you have a college degree and a nice job to go along with your pile of student loans. If your rate is decent (Less then 7%) then you can take your time paying these down, but paying extra is still a good idea.
4. Home
Home loans are known as collateralized debt. The home is the asset that they would take from you if you could not make your payments. A home loan also will have no effect on your net worth; the 200k loan is offset against the 200k home that you bought. The argument is all over the board on this one so I will break it down.
Do Pay Extra If:
1. It is an interest only or ARM loan.
2. You plan to stay in the house for a long time
3. You want the satisfaction and good night’s sleep that comes from truly owning your home.
Don’t Pay Extra If:
1. You plan to move soon
2. You don’t fund your 401k to get the max company match
3. You want to use the money for other investments
4. You don’t have a slush fund set aside for major repairs or rainy days – put the extra into this instead
1 Comment | Liabilities | Permalink
Posted by fubar1383
