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Author Topic: OMC taking high risk  (Read 1573 times)

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Offline USA4ME

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OMC taking high risk
« on: October 08, 2008, 04:21:06 PM »
Quote from:
OPERATIONMINDCRIME

I Haven't Heard Anyone Recommending This, But Is My Financial Advice To Myself Sound?

First, let me say that I've had 55g rotting away for a year now, still too apprehensive to make a decision on what the **** to do with it. Stocks(thank god I didn't do that earlier)? CD's? Savings account? I never could decide what was best. But I had an idea this morning that I decided to look into, and the GUARANTEED returns are staggering. It's not something I've heard anyone recommend though, and I wonder if that's only because only a certain % of people could even consider it? But regardless, if you have any financial knowledge I'd like your opinion.

What I'm thinking is refinancing my mortgage from a 30 year to a 15 year mortgage, while throwing the 55g at the principal. When I ran the calculations, what it did was eye opening to me.

My mortgage was 240,000 2 years ago at 6%. I pay 1438 a month for just P&I. If I throw 55g at it and refinance to 15 years, with a new mortgage amount of about 178g and interest of about 5.375%, my monthly payment will be about 20 bucks less but the HUGE kicker is that my monthly payment will earn me 400 bucks EVERY SINGLE MONTH! Right now, my 1438 is split with most of it going towards the interest, and only about 264 bucks of it going towards principal. With the 15 year fixed 55g injected action, my 1400+ payment will be split with 659 bucks going towards principal! That means every single month I pay my mortgage, instead of throwing 400 bucks away towards interest I'm instead putting 400 bucks straight in the bank, with the money able to be withdrawn the day I sell my house.

Is there any other possible investment right now that I could earn 400 bucks a month guaranteed? Am I missing something here? Way I see it, if you've had your mortgage for a while and your loan amount has diminished quite a bit due to payments made over the years, then it might be a huge gain for you to think about refinancing to a 15 year fixed if you can afford the higher monthly payment. The money saved in interest is straight money in the bank that cannot be lost and will be liquid the second you sell the house someday.

Good idea? Bad idea? Guidance please.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4192944&mesg_id=4192944

I know this is possibly a slight disappointment to some of you.  One would have hoped that OMC was bright enough to know not to ask financial advice at the DUmp.  But when it comes down to it, he's just another kook.

There is the outside possibility that he's just throwing out this bone in order to amuse those of us who are lurking to see if the DUmmies realize that paying down the mortgage and refinancing (thus saving interest) for a shorter term is the best plan.  If so, he should have worded it differently in order to bring out the economic leper opinions and the laughs would have been even better.

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Offline DumbAss Tanker

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Re: OMC taking high risk
« Reply #1 on: October 08, 2008, 04:34:18 PM »
His strategy is far too sound for them to grasp.  I suspect the thread will sink rapidly as the DUmbfounded losers bypass it.  I like his approach though, most of my "Investment" is going into a very aggressive payment approach to a 20-year mortgage which I expect to have paid off well under the 15-year mark.
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Offline Tantal

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Re: OMC taking high risk
« Reply #2 on: October 08, 2008, 04:34:40 PM »
How the hell can OMC be sitting on 55-grand in this horrible * economy?
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Offline JohnnyReb

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Re: OMC taking high risk
« Reply #3 on: October 08, 2008, 04:41:03 PM »
You can't tell DUmmies nothing. I think OMC is trying to subtly educate the DUmmies in matters of personal finance.
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Offline LC EFA

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Re: OMC taking high risk
« Reply #4 on: October 08, 2008, 04:50:57 PM »
Making more than the minimum mortgage payment and paying off your loan faster ... jeez... Who'd have thunk that would be a good idea.

'Course, there are times when a mortgage payment etc is useful, especially if one wishes to reduce the amount of tax that one pays by negative gearing, but I suspect that the DUmmies don't have that problem.
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Offline MrsSmith

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Re: OMC taking high risk
« Reply #5 on: October 08, 2008, 04:57:55 PM »
Quote from: Tantal on October 08, 2008, 04:34:40 PM
How the hell can OMC be sitting on 55-grand in this horrible * economy?
Life insurance?
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Offline franksolich

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Re: OMC taking high risk
« Reply #6 on: October 08, 2008, 05:01:03 PM »
Quote from: MrsSmith on October 08, 2008, 04:57:55 PM
Life insurance?

Could be; it's been about a year since his wife died.

And that could explain his hesitation about how to use the money too.
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Offline MrsSmith

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Re: OMC taking high risk
« Reply #7 on: October 08, 2008, 05:11:14 PM »
Quote from: franksolich on October 08, 2008, 05:01:03 PM
Could be; it's been about a year since his wife died.

And that could explain his hesitation about how to use the money too.
Yeah.  I'm sure it's been hard to think of doing anything with it...sort of like "blood money."  I know I did absolutely nothing with the little my folks left me until I had to take some to deal with court and court-ordered "adult child" support.  I couldn't stand the thought of making any gain from the loss.
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Offline miskie

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Re: OMC taking high risk
« Reply #8 on: October 08, 2008, 05:51:35 PM »
I agree, its probably life insurance gained from that whole tragic episode. As for his plan, its a sound one - getting out from a mortgage years earlier will not only do him good in the short run, it will help in the long run when his kids are looking for college funding. His home will have far more value to borrow against if necessary once its all paid off.
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Offline Toastedturningtidelegs

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Re: OMC taking high risk
« Reply #9 on: October 09, 2008, 08:05:40 AM »
This exchange is priceless :rotf:
Quote
TheGoldenRule  (1000+ posts)        Wed Oct-08-08 10:11 AM
Response to Original message
3. Money is the root of all evil. But you know that. nt
 

All truth passes through three stages.

First, it is ridiculed. Second it is violently opposed. Third, it is accepted as being self-evident.


FYI-my user name is a total in your face to the powers that be for their complete lack of ethics.
OMCs response :-)?
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Wed Oct-08-08 10:23 AM
Response to Reply #3
12. So Is Stupidity. n/t
 Reverend Wright's Audacity To Hope Speech We're all fighting the good fight. Always remember that we're in this together, and I fight proudly beside you. Never let keyboard bullies bring you down, for we are stronger than they
:lmao:
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Offline overlord

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Re: OMC taking high risk
« Reply #10 on: October 10, 2008, 03:55:12 AM »
Wow, some of the advice he's getting is unbelievably awful :banghead:
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Offline DixieBelle

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Re: OMC taking high risk
« Reply #11 on: October 10, 2008, 05:55:06 AM »
Why does he even stay there? I guess he's hoping that the real Democrat party will raise its hand at the DUmp. That ain't gonna happen!
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Offline Toastedturningtidelegs

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Re: OMC taking high risk
« Reply #12 on: October 10, 2008, 10:04:39 AM »
Quote from: DixieBelle on October 10, 2008, 05:55:06 AM
Why does he even stay there? I guess he's hoping that the real Democrat party will raise its hand at the DUmp. That ain't gonna happen!
I think he actually enjoys irritating the complete moonbats over there :-)
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