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The Water Cooler
General Discussion
Thoughts on 'the market' and retirement fund, election, etc.?
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<blockquote data-quote="SlugSlinger" data-source="post: 3401472" data-attributes="member: 7248"><p>I imagine you do, and there are reasons why you don't.</p><p></p><p>The thing is, timing is everything with interest rates. To take advantage of them you must go against common sense or intuition. Kind of like the stock market. Most people buy high and sell low due to emotions. And that's another reason not to take advise from most people. Also, credit score enables you to get the best rates possible and be able to negotiate rates.</p><p>[ATTACH=full]170310[/ATTACH]</p><p>When I bought my truck, I planned to pay cash, but the general manager told me if I took out a loan through the dealership, he would knock another $1,500 off the negotiated price. My first question was, is there a penalty for early payoff. He said nope and after reviewing the documents, there was no penalty. So I took out a partial note on Saturday. On Monday, I contacted both of my credit unions. One couldn't match the rate of 1.99% I got at the dealer, but the other cu matched that rate and paid me $200 to transfer the loan. So, Monday I paid off the dealership loan and moved it to the cu and essentially lowered my rate with the cash I received.</p><p></p><p>But, to your question. Are you familiar with high yield savings accounts? They pay higher rates than CDs in most cases and are FDIC insured to $250K. They are essentially risk free to that amount. Before Covid, the rate was 2.62% and I was paying 1.99% on my debt, including my mortgage. I was making money by not paying off my loans. When taxes were accounted for, it was not much, but it was net positive.</p><p></p><p>This is the current rate at one institution. Last week it was 1.11%, and it continues to drop. Again, it's all about timing and your credit score. If you borrow during bad times, you get a better rate if your score can support it. And you hold the cash. And when the economy turns around, you can be in the situation I was in before Covid where my savings is earning more than my debt was costing me.</p><p>This is today's rate at Vio Bank. They are a subsidiary of Mid First in OKC.</p><p><a href="https://www.viobank.com/online-savings-account" target="_blank">https://www.viobank.com/online-savings-account</a></p><p>[ATTACH=full]170311[/ATTACH]</p><p></p><p>At this point in my mortgage and truck loan, I will pay $114 in interest on the declining balance of the loans until the loans are paid off, which is just a few months down the road. I will earn ~$106 in interest on the savings balance that is equivalent to the loan amounts today. There is no reason to pay these off early now.</p><p></p><p>And I haven't even mentioned my stock investments. This is where the compounding goes into high gear!</p><p>[ATTACH=full]170312[/ATTACH][ATTACH=full]170313[/ATTACH]</p></blockquote><p></p>
[QUOTE="SlugSlinger, post: 3401472, member: 7248"] I imagine you do, and there are reasons why you don't. The thing is, timing is everything with interest rates. To take advantage of them you must go against common sense or intuition. Kind of like the stock market. Most people buy high and sell low due to emotions. And that's another reason not to take advise from most people. Also, credit score enables you to get the best rates possible and be able to negotiate rates. [ATTACH=full]170310[/ATTACH] When I bought my truck, I planned to pay cash, but the general manager told me if I took out a loan through the dealership, he would knock another $1,500 off the negotiated price. My first question was, is there a penalty for early payoff. He said nope and after reviewing the documents, there was no penalty. So I took out a partial note on Saturday. On Monday, I contacted both of my credit unions. One couldn't match the rate of 1.99% I got at the dealer, but the other cu matched that rate and paid me $200 to transfer the loan. So, Monday I paid off the dealership loan and moved it to the cu and essentially lowered my rate with the cash I received. But, to your question. Are you familiar with high yield savings accounts? They pay higher rates than CDs in most cases and are FDIC insured to $250K. They are essentially risk free to that amount. Before Covid, the rate was 2.62% and I was paying 1.99% on my debt, including my mortgage. I was making money by not paying off my loans. When taxes were accounted for, it was not much, but it was net positive. This is the current rate at one institution. Last week it was 1.11%, and it continues to drop. Again, it's all about timing and your credit score. If you borrow during bad times, you get a better rate if your score can support it. And you hold the cash. And when the economy turns around, you can be in the situation I was in before Covid where my savings is earning more than my debt was costing me. This is today's rate at Vio Bank. They are a subsidiary of Mid First in OKC. [URL]https://www.viobank.com/online-savings-account[/URL] [ATTACH=full]170311[/ATTACH] At this point in my mortgage and truck loan, I will pay $114 in interest on the declining balance of the loans until the loans are paid off, which is just a few months down the road. I will earn ~$106 in interest on the savings balance that is equivalent to the loan amounts today. There is no reason to pay these off early now. And I haven't even mentioned my stock investments. This is where the compounding goes into high gear! [ATTACH=full]170312[/ATTACH][ATTACH=full]170313[/ATTACH] [/QUOTE]
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