Reginald

I wasn’t going to write about this for today, but something strange happened the other night when I was hanging out with Reginald.

We call him Reggie for short, but I’m considering calling him Reg (not like reg in regular but with a j sound) at times when I don’t feel like talking so much.

Maybe I just wont’ call him any of those because it isn’t his real name.

Anyway, Reggie and I found this website:

http://www.bankrate.com/calculators/home-equity/additional-mortgage-payment-calculator.aspx

And if you have a mortgage right now, I want you to use it!!!

Ever heard of amortization?  Well it’s dumb.  All it means is the loan officer takes as much interest as possible first.  They just named it something fancy so we wouldn’t bother with understanding it.

I wasn’t and still am not sure if amortization schedules are uniform throughout the banking/credit union world, but this website seems to think that they are.

So go to this website if you have a mortgage, and figure out how to pay that bad boy off early.

I’m not going to give you my information, but I’ll tell you a little bit of that won’t give anything away.

If I paid the minimum on my mortgage for the entire 30 years, I would pay over $140,000 in INTEREST ALONE.

I don’t want anyone to ever do that.  If you need to get a 30 year mortgage that’s fine.  It’s more attainable than a 15 year unless you want a tiny house with minimal payments.

But if you get the 30 year, go into it with the expectations of paying it off early.  This website will help you formulate a plan.

We recently started paying 15-year type payments on our 30-year loan.  According to this website, that will reduce our mortgage payments by almost 13 years!

As I played around with the calculator, Reggie says, “I know what you’re next blog post is gonna be about.”

Oh Reggie….

You don’t even know me.

Everyone else should be excited.

In my case, if we paid just $20/month extra towards our mortgage, we would pay our mortgage off a year early and save nearly $6000!!!

In the grand scheme of things, that isn’t a ton, but it’s still 6 thousand less than what the bank wants.

Seriously, if you have a mortgage, use the link.  Get excited about it.  Formulate a plan, and implement it.  I want you to pay your house off early.  As early as possible without living in misery.

Short and sweet this time.  Just use the website.  Stop giving the bank money.  When you’ve finished your house payments, I want the bank to say

Well dang… we didn’t make any money off of them.

Do not conform.  And screw debt.

 

Cash is King?

My friends in 1776 (we talk on the phone all the time) would have some words for those of you who say cash is king.

King’s didn’t fly so well with these guys.  They made it clear.  And red.  And white.  And blue.

You know who rules the finance world?  The rich man.

You know who doesn’t know what it’s like to be poor?  The rich man.

You know who says cash is king?  The rich man. And the middle class who use the rich man’s context in their empty pocket lifestyles.

I’ve been spending a lot of time reading about and hearing from people who have the perfect plan for building wealth and paying off massive amounts of debt and so on and so forth…

You know who they are?  Rich people.

Now, I’m not saying cash is a bad thing.  I just want to rearrange the way we think about it.

In most cases across the country, the common folk will be taking out a loan at some point or another.  I hope it isn’t for anything silly, like a hamster or a trailer hitch, but I can’t tell you what to do.

Just don’t do that.

When you decide to take out this loan, though, I need you to listen to me and not your financial guidance person, whether it’s your real estate agent, your loan officer, or your dear sweet mama.

First, and foremost, I hope you have money to pay down on the loan.  That means that I hope you have cash.

But wait, you say, all smugly and uppity-like, I thought you said forget about cash!?!

Hold your horses.  I don’t know where that phrase came from…

Just hold ’em!

Secondly, I hope you have enough cash to pay a significant amount on that down payment.

What?  Is that not profound?

Third, pay more money every month than your minimum payment, another recommendation that requires cash.

So what’s the difference in my cash and banks’ cash?

1.  Down Payments

You will need a down payment on a significant loan (mortgage).  Once upon a time, you needed a significant one to avoid stupid wastes of money.  Now, however, banks will gladly let you borrow $300,000.  If you don’t have money for a down payment?  They’ll let you borrow a second amount for whatever you need for the down payment!

The banks’ cash is money they want you to keep in order to pay them more in the long run.  My cash is the money I want you to spend in order to not have to pay more than you have to.

2.  Significant Down Payments

Your bank will tell you that you want to have some cash left over.  And I agree that you do not want to deplete your savings.

But the more you put down up front means the less you will pay in interest.

But sir, you say again, a $200,000 mortgage vs a $210,000 mortgage only affects your monthly payment by like…. a little bit.

Dude… I have the mortgage formula saved on my phone.  I know exactly how much a mortgage costs every month in any given situation.

The banks don’t even know the formula.  They just plug numbers in and POOF! out comes this magical piece of paper that says you owe them crap loads of interest.

Forget about cash, and forget about monthly payments.  When it comes to applying for a mortgage, look at the interest.  Fight the interest.  It is not your friend.

The banks’ cash is money they want you to keep in order to pay them more in the long run.  My cash is the money I want you to spend in order to not have to pay more than you have to.

3.  Monthly Payments

Interest that you pay is NEVER your friend.  I don’t care who says otherwise, if they are billionaires, if they have multiple finance degrees, if they are world renowned philanthropists…  I don’t care.   They’re wrong.

There is not one single thing that will benefit you from paying interest that will overshadow the fact that you are paying interest.  Not one.  Nope.  Not even that.  Whatever it is you’re thinking.  Nuh-uh.

You know what happens to interest the next month after you’ve overpaid on your loan?

It goes down.

It’ll take some time and effort to alter the pattern of your mortgage interest, but it is possible, and if you intend to pay all the interest they’re asking of you on a 30 year mortgage, you’re being robbed.

If you can afford it, make the sacrifice, and pay off your home early.  I’m telling you, the minimum payment is making somebody rich, and it ain’t you.

The banks’ cash is money they want you to keep in order to pay them more in the long run.  My cash is the money I want you to spend in order to not have to pay more than you have to.


Again, not profound?

I just told you to spend more of your money upfront and every month… when the world tells you that cash is king.

Am I leading you astray?

I wonder why the bank is telling you that cash is king…

Because they profit on your interest!

It blows my mind that the same people telling you that cash is your best friend are also people telling you that you need one of their credit cards.

Spare me.

Paying more now saves you later.

I’m seriously not saying to not have cash.  You need available money at all times that you can grab when you need it.

If I’m ever rich, I will max out at least 2 bank accounts with money that I never intend to invest, that I can take at any time.  (I said if I’m ever rich… which means other money would certainly be tied up in investments).

The rich people don’t tell me to do that even now.

I really don’t understand that.  If I need a car, I’m buying it and leaving with the title.

If I want to invest in some real estate, I’m closing as an owner, not a borrower.

It’s impossible to do these things when financial advisors are constantly telling us to write them a check so our wealth will grow (which, again, I’m all for building wealth, but their ideas are contradictory).

So I want cash.

But while I’m entering a mortgage or I’m already in one, interest is overwhelmingly more evil than cash is good.

I know you’ve all heard it said, The borrower is a slave to the lender.

SLAVE!!

There’s no need to look for hidden connotations behind the word.  It is spelled out clearly for us.

An example:  We need a car loan.  We get one.  The loan officer DEMANDS full coverage insurance.

Nothing wrong with full coverage insurance.  Nice peace of mind.  Not un-affordable.  Cool.

BUT they demanded it.  We cannot have the loan with them without full coverage insurance.

Slavery.

Another example:  We need a house.  We got one.  Needed a loan because we don’t have 200 grand lying around.  The loan officer DEMANDS a termite bond.

Nothing wrong with a termite bond.  Nice peace of mind.  Not un-affordable.  Cool.

BUT they demanded it.  We cannot have the mortgage with them without a termite bond.

Slavery.

The loan officer controls the entire situation.  You have no word in the matter once the papers are signed.  You don’t own the car.  You don’t own the house.

Did you know that the bank can, at any time throughout the life of your loan, demand that the balance be paid in full?

It’s true.

And… freakin’ scary.

Slavery.

Please don’t misunderstand what I’m saying.  You need cash, I’m only challenging the way the world worships it as all sovereign.

Again, I hate interest way more than I like cash.

And, as my friends in 1776 would say, We recognize no sovereign but God, and no King but Jesus!

Do not conform.