Welcome to Frequent Miler’s week in review around the web where we recap some of the stories that caught our eye this week around the Internet. Enjoy!
How to Hack Your Mortgage Into A High Interest Savings Account
Money Metagame brings us an interesting analysis of an unconventional method to answer a question that all of us consider on some level: how do you make your money work for you? Instinctively, I want to completely disagree with the author’s method here. My gut is that it isn’t the best way to bridge the gap in interest rates. But I’ve done much less crunching the numbers on this than Noah has, and his post has inspired me to crunch some numbers of my own. In the meantime, I’m very curious about any reader responses — what unconventional hacks have you developed to make your money work for you? How would you or do you handle the gap between the cost of holding cash and the need for liquidity?
My Simple Currency Exchange Rate Philosophy
Through a much simpler mathematical lens, Shelli at Travel with Grant takes some of the stress out of currency conversion when on vacation. Do you watch the exchange rate day by day as you travel? Do you break out a calculator or use an app to track costs and compare them against your credit card bill? How do you handle foreign currency? Shelli’s post reminded me that I need to get a debit card without a foreign transaction fee before my next international trip. I know — positively stone age of me not to have that. On the flip side, I don’t often use cash and therefore take a similarly laid-back approach in my focus on currency conversion.
Travel Insurance Annual Plans: Are They Right For You?
I previously covered a post from The Deal Mommy about the value of travel insurance. While I know Gary Leff disagrees with it, and the truth is that I’ve gone without it more often than not, I understand the underlying premise of insurance is that you’ll be happy if you should ever need it and if you don’t you should be happy that you didn’t. Earlier today, at FTU Minneapolis, the subject of an annual travel insurance policy came up — and shortly thereafter I came across this post from The Deal Mommy exploring their value. I like the set it and forget it component and think that I may start to handle travel insurance this way if I continue to travel as much in years to come.
Southwest’s New Seat
I’ve said it before and I’ll say it again: The Southwest Companion Pass is the hands-down best value in domestic travel. Obviously its value to you will depend on whether or not you travel alone and whether or not Southwest serves your city — but it’s hard to argue with the value of 2-for-1 and the flexibility to cancel a flight less than an hour before departure (as I did once this week). But after a longhaul international business or first class flight, the first trip in a Southwest seat is always an adjustment. But one surprise for me over the past year has been the variance I’ve seen in Southwest planes despite them all being 737’s. I’ll admit to not being a true “avgeek” — I can recognize an A380, but I couldn’t look at a 737 and tell you if it’s a -600 or -800 or -952. But I can tell you that the newer interior Trevor reviews here feels fresher and more inviting — and I’m happy for that for now even if it comes at the cost of some cushioning.
That’s it for this week around the web. Check back soon for this week’s last chance deals.
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I have the holy grail of mortgages: 15 year at 2.875% with a 50% mortgage credit certificate (any first time home buyers REALLY need to look into this before buying a home). The MCC refunds 50% of interest paid during the year as a tax credit (capped at $2000) FOR THE LIFE OF THE LOAN. My first couple years I’ll be slightly above $4000 in interest, so I’ll get $2000 back. Once my paid interest drops below $4000 I’ll get half of it back come tax time. Pair this with my high yield checking account (2.5% APY up to 20k and .35% on anything above) and there is actually no reason to make any additional principal payments (save for when CSR and Ink preferred were giving 3x on plastiq using FFD). I am always getting more interest on my checking than I am paying on my mortgage.
So, the real hack to mortgages is getting one with an MCC. They vary from state to state, and there are income restrictions preventing high earners for getting one. But if you can get one, they are a dream.
Since you asked for us to share our debt-paying schemes, when I graduated from College I had 2 loans – the givernment loan was at like 2.3% but the additional loan was closer to 5%.
Also at that time, credit cards were offering 0% up to 18 months and would also frequently tie in “balance transfers at 3% or $20 whichever is LESS”.
I had one card that had a max fee of like $50 on cash advance, and for some reason they gave me a huge credit limit coming out of College. I believe I deposited around $25,000 into my bank account, then transferred to 2 0% cards that had the $20 “max” fee.
When the promo period ran out I applied for new 0% cards with the $20 “max fee” and transferred again.
All along the way I made monthly payments and put every bonus and tax return against the cards. Scared me half to death the whole time (knowing if I ever missed a payment the interest went up to 17% or whatever, but after a few years I had paid the whole thing off at effectively 0% (add in the fees what is that, like .05%?).
I figure I probably saved somewhere between $2k and $5k and got a ton of satisfaction out of not giving that money to the banks.
Afterward I looked into how I could leverage it for investments (borrow at 0% and invest in CD’s, etc) but the max $20 fees started to disappear and I never found a way to leverage it that that was profitable enough to satisfy my risk aversion either.
Sadly, this was all before I discovered travel hacking. I even remember one Citi rep pleading with me not to give up my 50,000 points and telling him to “just close the card!” because all I cared about was the interest rate and I thought he was just trying to smooth-talk me into having to pay the annual fee that was about to hit. Oh well… 🙂