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

     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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Written by J.P. Wicklein

     I live on an upper floor of a high rise condo building in Chicago.  High rise living provides its residents with security and amenities without many of the hassles associated with a house. Given the fact that there is only one entrance to my unit, an intercom to contact the doorman, and 24/7 security guards I feel very safe living here. My condo also provides a dry cleaner, grocery store, pool, and a gym. Obviously, I never need to worry about mowing the lawn or shoveling snow, either. If I didn’t have to go to work I could live in my building for months without having to leave.

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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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…………………..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
     The following summarizes each of the Financial Fellow articles for November 2008 in two sentences or less.
1)   How to Avoid a Big Tax Refund:  If you wish to increase your take home pay throughout the year, while decreasing your annual tax refund, you can do so by increasing the number of [...]

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Written by J.P. Wicklein

     In the spirit of Thanksgiving I thought it appropriate to make a list of financial things to be thankful for.  Although some of the items listed below are certainly negative they also present a silver lining.

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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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