Maximizing Returns

Hello All,

As frequent readers of DINKs finance will know, we are currently in the midst of paying off our second mortgage. It’s been an interesting journey, but we wanted to update you on where we currently are with the debt payoff progress.

We have managed to get our debt total down to $9,000 and have gotten out of Washington Mutual. This is good news in a couple of respects. First off, thanks to a very generous gift by James’ mom we were able to pay off a big chunk the debt. Second, since we moved most of the debt onto a zero balance transfer card, it’s gotten a lot cheaper to carry.

Here is our Washington Mutual statement, it’s been marked up so you can see what we are talking about.

Now that our obligation to Washington Mutual has been paid up, we’re shifting our strategy. The balance transfer card will charge us no interest for up to a year, so our plan is not to pay off that balance immediately. Instead, we are going to put it on auto pay and let our cash build up in an interest bearing ING account. After we have saved up enough in the account, we are then going to pay off the credit card.

Generally our approach is to throw as much money as we have directly at our debt, or savings, as fast as possible. This means often sending in multiple payments per month. This method might mean more active management of our debt, but it also means that we reach our goals faster.

Now that we aren’t paying interest on our mortgage with it transferred of to a zero percent credit card, the strategy of saving up the cash (rather than paying it off immediately) will help us maximize the total return.

There are two main reasons to take this approach.

1st – Money, we get some nominal interest from keeping the cash rather than handing it over to the Citibank

2nd – Options, we retain the option of having the money with us instead of them. All things being equal, its better to have more choices.

Best,

James&Miel