Comments on Dual Income No Kids: A Hassle Free 6 percent...

Thanks Annie,We actually have only tax deductible ...

2008-02-24T17:36:11.303-05:00

Thanks Annie,

We actually have only tax deductible debt. There is a little on credit cards, but my wife Miel generally pays that off.

So, for us the tax deductability is a wash, its all deductible.

Therefore, all things being equal, it makes the most sense to pay off our highest interest debt first. In this case, its the 9% second mortgage.

Thanks for commenting! We love that.

Best,

James

If your plan is to discharge the debt on Sept 30.....

2008-02-23T11:05:00.000-05:00

If your plan is to discharge the debt on Sept 30... and your having difficulty finding a lender willing to do 6% for a net savings of $150 in interest - why not just keep the 9% and be flexible on the target payback date - ammending it to November 30?

One other factor. The 9% interest you are paying is tax deductable. If you go with a rate that is less, what is your actual net savings because of the tax benefits you were getting because the 9% was a second mortgage?

Also, if you do get a lower rate, or when you pay off the loan, remember to review your withholding deductions so that you won't get a tax owed next year because you didn't adjust for the deductable interst you had been paying.

With your kind of net worth, assuming you have gre...

2008-02-22T23:05:00.000-05:00

With your kind of net worth, assuming you have great credit you should be able to get a 12-month 0% rate with a 3% transfer fee and no other fees. Currently HSBC has a $99 cap on the 3% fee.

Over the years I've borrowed at 0% from several different companies: Chase, MBNA, Citi, Discover, American Express, and HSBC. In some cases-- like Discover about a year ago-- there wasn't a fee of any kind. But one thing I can say about all of them: while I appreciate the stories of people who have been hit with unexpected fees because they missed a payment or whatever, NOT A SINGLE ONE of these companies HAS EVER hit me with an unexpected fee. If they say it's 0% for 12 months with no transfer fee, then that's what it is; if they say it's 0% for 15 months with a 3% fee capped at $75, then that's what it is. Admittedly, this has only been my own personal experience, and admittedly I've never tried to see what would happen if I was late on a payment (I can guess), but I've never been given any reason to worry about "hidden fees."

A few years back, when I knew I was about to get a huge raise (by changing jobs), I put more than $30k that I didn't have into my wife's 401k and mine, and her Roth and mine; I borrowed that money at 0% and took 3 years to pay it off (I had to transfer balances a couple more times). There was never any interest, but sometimes there was a balance transfer fee (not "hidden", of course), and never any additional fees. If I consider the transfer fees (when they existed) as "interest", then my APR worked out to about 1.2% during that time. My first thought was to pay it off within the first year (it was a good raise) but ended up stretching it out over 3 years because I was interested in putting more money into the stock market each month.

(This is off topic, but incidentally, after loading up those 401ks basically on our way out the door, I then rolled them over to a traditional IRA so I didn't have to hold it in the high expense-- like .80% or whatever-- mutual funds that the 401ks were charging).

But to return to topic, though having only my own expense over about the last 8 years to go by, I'm skeptical that "hidden fees" are a very high risk for anyone who chooses to pay on time each month.

At one point you were considering investing money ...

2008-02-22T19:23:00.000-05:00

At one point you were considering investing money in Prosper as a lender. Did you ever do that?

With Lending Club they have set rates so you know right away what your interest rate is going to be as a borrower. If you decide to try to get a rate bid down at Prosper you can use the LC rate as a benchmark.

Tom from Prosper Lending Review