Saving Money as Prices Increase

[Hay Dude]

It works until the Fed starts jacking the prime (which they will soon) and then your ARM turns into an amputation as your payment goes north at a high rate of FRN consumption. All 3 of my rentals are on fixed rate loans and stay that way.

If you are gonna refi to a fixed rate, better do it real soon or you may be unpleasantly surprised that your FR is steep.

It’s not based on if the “fed starts jacking the prime”.
Its based on the libor rate out of London.

https://en.wikipedia.org/wiki/Libor

Even if it was based on prime rate, you still have all the money you saved when it was lower than a fixed rate.
The ARM we have adjusts based on the libor rate + 2%. If the libor rate is .5, then my adjustable rate mortgage rate for that year is 2.5%. I’m .5% money ahead of a 3% fixed and I have all year to switch to a fixed if I want to.
It has helped us acquire real estate.

 

[Diggin It]

THIS is how I save money.

Been needing a new stove for a year now. Have been watching sales and promos trying to time everything against new credit card offers. Finally, it all fell together. New gas ranges with the features I wanted went on sale at two big box stores so that I could compare brands and models. Many were marked down 20% or more. Picked one at $749, marked down from $1,100 or so.

Found a credit card offer for a $200 bonus cash back if you spend $750 in the first 30 days, plus 5% normal cash back, plus 15 months 0% interest. With tax, the purchase exceeds the $750 mark.

$549 is well within what I was hoping to get a new stove for.

 

[Alan W.]

My wife fusses at me because I wait and look till I get what I want at the price Im willing to pay.
If its possible and the item is not needed immediately then it pays to wait and check around.

 

[TheMan419]

THIS is how I save money.

Been needing a new stove for a year now. Have been watching sales and promos trying to time everything against new credit card offers. Finally, it all fell together. New gas ranges with the features I wanted went on sale at two big box stores so that I could compare brands and models. Many were marked down 20% or more. Picked one at $749, marked down from $1,100 or so.

Found a credit card offer for a $200 bonus cash back if you spend $750 in the first 30 days, plus 5% normal cash back, plus 15 months 0% interest. With tax, the purchase exceeds the $750 mark.

$549 is well within what I was hoping to get a new stove for.

This is a great way to go if you have the credit rating and the discipline to pay the thing off timely. When we do the 0% interest thing we divide the payment up in less time than the deal. In your example I would divide it up into 13 payments. That way there is zero chance you miss that last payment and get socked with all the interest. Also I then round up. For example $549/13 is $42.23 per month. I would just pay $50 and be done in 11 months.

 

[Mtsoxfan]

A heat pump runs more efficient than an electric heater. Ours, at its most efficient, has about a 4 to 1 ratio. This means it takes 1 dollar to produce 4 dollars worth of regular electric heat. That ratio goes way down when the temps are, but still better than a conventional electric heater.

 

[arto98607]

THIS is how I save money.

Been needing a new stove for a year now. Have been watching sales and promos trying to time everything against new credit card offers. Finally, it all fell together. New gas ranges with the features I wanted went on sale at two big box stores so that I could compare brands and models. Many were marked down 20% or more. Picked one at $749, marked down from $1,100 or so.

Found a credit card offer for a $200 bonus cash back if you spend $750 in the first 30 days, plus 5% normal cash back, plus 15 months 0% interest. With tax, the purchase exceeds the $750 mark.

$549 is well within what I was hoping to get a new stove for.

Sounds pretty good and maybe it will work out as savings for you, however I suspect for many consumers it will end up being false savings in the long run!

Many will end up later mis-using the new credit card and end up in credit card debt, but hopefully you will avoid it?

 

[TheMan419]

It’s not based on if the “fed starts jacking the prime”.
Its based on the libor rate out of London.

https://en.wikipedia.org/wiki/Libor

Even if it was based on prime rate, you still have all the money you saved when it was lower than a fixed rate.
The ARM we have adjusts based on the libor rate + 2%. If the libor rate is .5, then my adjustable rate mortgage rate for that year is 2.5%. I’m .5% money ahead of a 3% fixed and I have all year to switch to a fixed if I want to.
It has helped us acquire real estate.

Except LIBOR is going away and not used in the US any more.

LIBOR Transition | FHFA

Fannie Mae, Freddie Mac, and the Federal Home Loan Banks (FHLBanks) all have financial instruments that reference Intercontinental Exchange London Interbank Offered Rate (ICE LIBOR), the most widely used interest rate benchmark in the world. Since 2017, the Financial Conduct Authority, the...

www.fhfa.gov

Most if not all variable loans in the US must now be tied to something that is NOT LIBOR as of Jan 1, 2022. That being said we knew the end of LIBOR was coming so most if not all variable products indicate they are either LIBOR or Prime Rate if LIBOR does not exist. So as of Jan 1, 2022 variable rate prodcuts are mostly on the prime rate and cannot be based on LIBOR.

 

[sree251]

All these money saving ideas are depressing. Feels like we are being choked to death.

 

[Diggin It]

This is a great way to go if you have the credit rating and the discipline to pay the thing off timely. When we do the 0% interest thing we divide the payment up in less time than the deal. In your example I would divide it up into 13 payments. That way there is zero chance you miss that last payment and get socked with all the interest. Also I then round up. For example $549/13 is $42.23 per month. I would just pay $50 and be done in 11 months.

I'm shooting for that range, 10-12 months. I might get it done sooner because I have plans to do it again for another larger purchase with another card with a similar promo once I get a few payments logged into this one.

Many will end up later mis-using the new credit card and end up in credit card debt, but hopefully you will avoid it?

I've never come close to maxing out a card. My usage is generally in the 10% or less range which is how I keep an 800+ rating. Plan here is to rotate this card into more primary use since the monthly cash back benefit is 5% instead of the 3% or less on other cards. But I need to pay this purchase down first, so this card will remain unused for a few months. Normal card use for utilites and routine purchases like groceries is generally in the $400/mo range or less and the cards get paid in full each month if they don't have a 0% interest period.

I did a Lowes store card for the 24 month 0% promo when I bought the standby generator. That card sits in a drawer unused until I get that paid down. Shooting for about 20-22 months to beat any last date gotchas as outlined above.

Weird thing is my rating went up a few points in the days after I got this card. Why? New card shows trust by lenders. Credit Limit on the new card raised my available credit and lowered my utilization from around 10% to around 7%.

I have to time the new cards carefully though. I try for no less than six months between applications and to keep below the five cards in 24 months that some banks use as a cutoff. I have very little income, but managing cards so closely means that I usually get approved instantly ... as this one was.

The $20K loan for the tractor was approved in less than an hour and with one phone call.

 

[arto98607]

Glad to hear it's working good for you.

I came from a different school and as a principle would never pay groceries etc. with a credit card - no matter what % cashback....