Financial Fellow

Written by J.P. Wicklein

     Buying a home will require you to make a myriad of decisions.  One of the most significant questions you’ll need to answer is whether to get a fixed rate mortgage or an adjustable rate mortgage (ARM). The answer to this question generally depends on two factors: 1) What’s the difference in interest rates between the ARM and the fixed rate? 2) How long do you plan to stay in the home you’ll be buying?

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Written by J.P. Wicklein

     Lately, I’ve heard financial talking heads throwing around the “D” word…Depression.  It’s still too early to tell if we are officially in a depression. Without question, though, things are ugly and getting uglier each day. This week, five stories about the recession caught my attention:

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I came across a video recently that does an excellent job of explaining what the credit crisis is and how it came to be. The video uses simple, easy to understand animation. Check it out!

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

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Written by J.P. Wicklein

     I just moved in with my girlfriend.  A couple days prior I accepted an offer on my condo from a potential buyer (more on that in a future post). As soon as the sale of my condo is finalized I’ll begin splitting the cost of my girlfriend’s mortgage with her. For the most part we plan to divide our living expenses right down the middle.

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…………………Photo by: urban data………………………………  Written by J.P. Wicklein

…..Recently I wrote a post on my biggest financial blunders. In the article I discussed buying a home too soon, maintaining a credit card balance, having minimal short term savings, and battling a short stint with gambling. Those actions were far from the smartest things I’ve ever done. That said every coin has two sides. Here’s the other side – my biggest financial achievements:

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………………..Written by J.P. Wicklein…………………………………..Photo by Waffler

…..Throughout the course of my adult life I’ve made smart financial decisions. On occasion, though, I’ve made some mistakes. With that in mind here are my biggest financial blunders:

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…………………..Photo by: pnwra……………………………………Written by J.P. Wicklein

…..I’ve heard more than one person say “You should buy as large a home as you can afford in order to get a bigger tax deduction and make the most money off appreciation”. This is terrible advice. If you choose to buy a larger (more expensive) home due to factors such as a good school district, location, the number of bedrooms, or other non-financial considerations that is understandable. However, buying a more expensive home for the bigger tax deduction and greater gains in appreciation, or to use the deduction and appreciation to justify non-financial considerations, is as foolish as it is farcical.

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   Written by J.P. Wicklein

     Recently I heard a suggestion about a unique way to payoff your mortgage early:  Instead of making larger mortgage payments each month, invest the money and use it to pay your mortgage off in one lump sum. On the surface this sounds like a good suggestion. When you make larger mortgage payments each month the extra money pays down your mortgage but, it doesn’t earn any interest. If you put the money in a money market, or some other investment, it could generate even more money that you could use to pay off your mortgage.

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   Written by J.P. Wicklein

     I graduated from college with $25,000 in student loans.  Shortly thereafter I consolidated the loans at a fixed annual interest rate of 4.125% over a 20 year period.  Each month I make the minimum payment on my consolidated loan and not a penny more. Why? Since the interest rate on my student loans is so low, any additional money I could use to pay down my student loans is better spent contributing to retirement savings or paying down higher interest debt.

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Written by J.P. Wicklein

     I consider there to be four, primary financial benefits to owning your own home: The mortgage interest and property tax deductions, appreciation, fixed payments, and an eventual end to making payments. Upon further analysis, however, two of these benefits aren’t as sweet as they may initially seem.  

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