Your Questions About Save Loan Interest

Chris asks…

Is it true that Americans are saving more now?

News reports claim that American citizens are saving more after the melt down. I wonder how it is possible when they have such huge debt overhang in the form of mortgages and credit card dues. If I had some money I would rather repay my loan and save interest charges, wouldn’t I? Is Someone manipulating here?

John answers:

Well you need money to save and that’s an additional worry to govt. Of US, they need spending in the economy, which creates jobs. Saving will just kill more jobs. Recession seems as if it will just deepen.

Those who do have the burden of loans, I am assuming they are trying their best to pay it off, otherwise they will end up sleeping on the road. US government doesn’t give any social welfare, so much inequality. Capitalism at it’s best!

Manipulating? Who is manipulating? I don’t know the answer to this question. I can have a go and say capitalism is manipulating here. But you never know, USA is so corrupt, they can cover up practically anything.

Sorry, this is more of a rant than an answer.

Lisa asks…

What type of account should i open to save for a house?

Im still young but i want to start saving for a house but i have no idea how i should start? Do i just get a regular savings account or CD? I don’t make a lot of money. Im completely clueless about this so any info will help. Thanks.

John answers:

In today’s market, I would say to leave it all in a checking account, until you really get ahead (or are offered a very good deal).

Save by not spending, and make your money work for you. Do not have credit card fees {pay off in full every month), bank fees (meaning you may need to leave 1 or 2,000 in the account at zero % interest to save (say) $5/mo bank fees – which is like making $60/1000 = 6% tax free per year as your money works for you – versus the 1% you would earn in a CD right now [60/2000 = 3% per year]), car loan fees and interest any more than you have to (i e pay off quicker, if you can*).

* you should have no debt plus the down payment plus an extra $10,000 in the bank when you go to buy a house [ ideally. As a realist, most people could never buy if they had to reach that goal.]

Charge everything on a cash back rewards credit card and pay the bill IN FULL every month to gain an extra $100+ for the year. Continue to shop wisely.

Compute house pmt – rent = $____ and put twice that amount in the bank every month to prove you can live on your income when you get the house. [Of course, put more away if you can.]

Considering you will want this money in a few years, it is advised to stay out of the stock market.

Something that may sound controversial is to keep you money instead of putting it into a retirement fund. I believe a house is part of a person’s retirement strategy, because you need housing all of your life. (and a house is no payment except taxes and repairs after 30 years.) { and $ into a retirement fund are of minimal tax benefit to you now. }

** The really tough call ^^^ is if your employer matches a 401K. Then you have to guess between the real retirement $ now and what rising house prices and interest rates will do to your wallet if you buy later than sooner.

Get your parents to help with the down payment, if possible (so you can buy sooner).

Good luck.

Steven asks…

Can i change from an interest only mortgage to a capital and interest mortgage?

I am 6 years into an interest only mortgage and want to change to a capital and interest mortgage. How do i go about this andhow do i get the money i have already paid into my endowment policy?

John answers:

If you want to totally restructure the loan so that you’re required to pay principal and interest you will have to refinance. They will give you new loan docs etc and there will probably be some fees associated with the refi. Otherwise, if you don’t care about the required stated payment, David M. (above) is correct – just start paying more each month and your principal will be reduced. This will save you the cost of refinancing.

Laura asks…

Is it possible to pay school loan early while still in school?

I received a unsubsidized Stafford loan for school. I will be reimbursed from my job for the classes I take as I get my grade per class. I would than like to turn around and put that money towards the loan as I get it from work. Is this possible? Or do I have to wait until I’m finished with school?

John answers:

You can pay on your loan at any time you want. If you can pay it off now, that is great. You’ll save on interest.

William asks…

How to deal with a company that charges you outstanding interest rates for being late.?

Auto loan that was to be paid off last july,because I missed two payments have extended the loan until Oct.2012. They are charging me an outrageous amount for missing two payments. Is this legal? I brought a 2006 new Chevy Malibu, Payments are $480.00 a month and they say my payoff date is next Oct. Where is the consumer advocates or do I need a Lawyer.

John answers:

Should have paid them on time.

There is not much point getting a lawyer (with the fees that they charge). Even if you win and do not have to make another year of payments you will end up spending all of the “saved” money on legal fees, leaving you in the same position.

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