February Mortgage Update: Mortgage misconceptions or why you should not get your financial advice from the MMM forum

Last month (January):
Balance:$15,645.52
Years left: 1.166667
P =$1,147.93, I =$66.47, Escrow =$809.48

This month (February):
Balance:$14,493.05
Years left: 1.083333333
P =$1,152.47, I =$61.93, Escrow =$809.48

Amount saved from prepayment:  $0

Because of my addictive personality, I’m not allowed to join any forums.  That doesn’t mean though that I don’t occasionally read fora even though I can’t participate.  Occasionally I have to say something, and since I’m not allowed to join, the something gets to spill over onto the blog.

In this case the forum in question is Mr. Money Moustache’s, and the “someone is wrong” thing is a few misconceptions about mortgages.  I know we’ve written about them before, but they obviously bear repeating!

  1. Mortgages work differently than student loans or credit card debt because they keep the payment the same each month and just remove months off the end with pre-payments.  That means that payments early in your mortgage are worth more than payments later in your mortgage because the mortgage, unlike other investments, doesn’t reamortize each month.  That means the amount you’re saving from pre-paying is different depending at what point you’re at in the mortgage.  You can see this by looking at an amortization spreadsheet, like this one from GRS.
  2. A common misconception is that you are increasing your risk pre-paying the mortgage because you can’t get the money back in an emergency unless and until you pay the entire thing off (and thus finish your mortgage payments).  That’s not actually true.  If you prepay your mortgage, you can, in an emergency, re-cast/re-amortize for a small fee (usually ~$250) and get lower monthly payments by lengthening the amount of time that you continue paying on the mortgage.  For example, right now my mortgage payment is a little over $2000/mo with 1.08333 years left.  If I re-amortized, my payment would be just a little bit more than what I’m paying for escrow, but I would be paying that sum over 13.4 years instead.  (And I have to pay for escrow even if the mortgage is gone!)  All that pre-payment means that in an emergency I can cut my monthly required payment, even though there’s still time left on the mortgage.  You don’t end up with quite as much ready cash so if you’re expecting an emergency you should keep it, but if the emergency is a low-probability event that may happen after years of pre-payment, you can likely recoup enough in lowered payments to get you through for quite a while.  [note that if you have a nonstandard mortgage, the rules may be different — you may not be able to as easily reamortize an adjustable rate mortgage.  Check with your lender if this is a concern. ]

Are there any money misconceptions that bother you?  What do you do when someone is wrong on the internet?  Do you belong to any fora?

Link Love

#realacademicbios   Also :(

I thought the comments on this one were especially clever (disclaimer:  half of them are mine…)

Birth of a Nation

Disney princesses and talking (I also wonder what it would look like if they took out the villains!)

glad to see I’m not the only one who thought Love Actually was really creepy

Also creepy

What has Obama ever done for us (with apologies to John Cleese)

This comment from quixote

Also this comment from Delia Harrington

Moosesplainer

Sheldon gets into the konmari thing

A good explanation of how the lead in pipes thing works with ph and stuff.  Water filters (note:  we do not get $ from this– I’m not exactly sure why #2 sent it?) (Because we should think about water sometimes, is why.)

A windy city gal needs your help for a reading thing

Stacking pennies discusses her minimum spend to be comfortable and breaks it out.

dear debt: what you don’t understand is that my husband and I are a TEAM. We tackle things together, both of us against you. You’re outnumbered. You can’t win. Scram.

When keeping chickens was patriotic

self driving cars and the future

Reading the people’s stories here is heartbreaking.

#defeathepantsiarchy

EPIC

Google questions: When you suck at answering ask the grumpies

Q:  should i roll my 401k plan at tiaa cref over to edward d jones

A:  No!  NO!  A thousand times no!!!  OMG that is a horrible terrible idea.  Don’t do it!  You will lose so much money.  AIEEEEE!

Q:  when is a second job not worth it

A:  When the marginal cost outweighs the marginal benefit?  Or maybe when the present discounted value of the job is not worth your next choice option?

Q:  do they give phd for accounting

A:  Yes

Q:  do smart toddlers sleep less

A:  On average, yes, according to survey evidence.

Q:  what happens if house is condemned still owe money it

A:  You still owe money on it.  (Consult your local regulations and lawyer.)

Q:  do nursing faculty usually get summers off?

A:  Depends on the school.  The ones I know teach year round, but that may just be school specific.

Q:  why is it superstitious not to sleep with any body parts hanging off the bed

A:  Because that’s not a real thing to worry about unless you keep your bed over like crocodiles or piranha or something.

Q:  can a tired gifted child do badly in iq test

A:  Yes.

Q:  who is mados

A:  maybe a cousin of Manos?

Q:  why are dentists weird

A:  Nobody knows, but damn are there some odd ducks.

February is Challenge Month

So I’ve been feeling awfully tired and out of shape recently.  That means this year’s February challenge should either be exercise or food related.  (Since I have PCOS, eating sugary/refined carb foods can have an especially detrimental effect on my health and moods.)

Last year I tried the 7 min workout and I hated it so very much.  I got stronger but I dreaded that part of each day.  So that didn’t last past February.

I’ve been debating two different things.

First, I could do a healthy-eating challenge to reset my diet.  Basically this means I eliminate sugar and refined carbs entirely for the month.  No pastries, no white bread, no white pasta, no white rice, no more TJ’s orange chicken.  I know this works out pretty well for me and I tend to feel more energetic and healthier and so on and so forth.  But it removes a lot of the minor joys in my life which seems especially hard when we’re temporarily living someplace with good bakeries.  So I’m trying to cut back on the lower quality stuff, but I don’t think I want to go straight-up cold turkey.  I at least want to be able to partake at work functions, even though I know we can do better at home.

Second, and what I’m going to go with, is an exercise challenge.  After some conversation with DH, I’ve decided I should do a step challenge, as in, walk at least X steps per day.  Now, the standard step challenge is to do 10,000 steps/day.  (Or to average that per week.)  There’s not really anything scientific about that number based on my quick internet search (if anything, the “scientific” number is 7-8K, but more doesn’t hurt).  I’m not sure how realistic 10K would be for me, so what I’m doing this week is actually carrying my phone around with me and using the iPhone health app to see what my regular step usage is according to the phone.  After doing that, I’ll see what a reasonable number to up it to would be.  (It’s not as good as a fit-bit, but if I use it as a baseline against itself hopefully that will be reasonable.)  I don’t normally carry around my phone, so it says silly things like I’ve done 20 steps/day on the weekends.  The most recent time that I was carrying around my phone was at a conference where all the hotels were far away from each other, and on those days I did average more than 10K, but I did what seems like a lot of walking on those days.

A problem I’m not sure what to do about is the weather.  It has been unpredictable.  On days like today it’s easy to say, oh yeah, if I didn’t get enough walking in during the day I will totally go on a long walk after work.  But that’s a bit harder to commit to when it’s pouring rain.  Maybe I’ll have to look into youtube aerobics or something.  (Yech.)

The end goal is to feel more energetic.  If walking more doesn’t work, then I probably will have to do more than just vaguely try to eat healthier.

The plan going forward is to check how much I’ve been walking per day during a regular week, like this one, and then to set a goal for walking that is bigger than that number.  If it is embarrassingly low, I will put in an increase to a less embarrassing number each week goes on in February.

(What happened to biking or taking public transportation, you ask?  Winter + DH being willing to drive me! And deeply enjoying spending that time talking with DH instead of being on the bus by myself.  And one of the bus drivers being kind of a jerk.) (Thank goodness we’ve passed the solstice and it’s started to stay light after work.  Still probably gonna stay with the car.)

For those who haven’t been following us forever, why February?  Because February is the best month for challenges!  January may have that post-holiday guilt and new year optimism, but February has the bigger benefit of being shorter.

How do you exercise/stay healthy?

Life with a smartphone

So I’ve had the smart phone for a little over two months at this point.   Has it changed my life for the better?  Um, yes.  Has it taken over my life?  Well, not yet, but it probably will eventually.

Our first two bills have been less than our dumbphone sprint bills.  The most recent was just under $50.

I still need to get google maps because the map program that came pre-installed both sucks and doesn’t seem to work on my phone.  DH has googlemaps on his and it’s a dream.  Maybe I should do that now.  I always think of it when I’m lost in a city and am having to use the cell for data (which is why our bill was higher this past month), which is not a good time to download it.

I’m *mostly* good about just using the wireless for data stuff, though when I’m traveling I’m not as good, and worse than that I have forgotten to turn the cell data off twice so it eats money in the background.

It is wonderful having yelp on hand, even if I don’t like the smartphone yelp app.  It’s still more wonderful than nothing.  (We knew this was going to happen– so many times I had wanted yelp when out and about and did not have it!)

I’ve used it to take a few pictures.  I now understand why my students are always using theirs to take pictures of the board or their homework or whatever.  Sometimes it is easier to just take a picture than to try to explain something.  My sister sent me a bunch of pictures she took with the kids, which was pretty awesome.

One thing I didn’t anticipate– I LOVE facetime.  I had always thought of video chat like Skype… which is just not fun to use.  Facetime is so much better.  So clean and fast, even when we’re both using wireless.  It’s like DH is in the room with me except I can’t touch him (which sucks).  And we’ve been using it for family rather than for work stuff– I still prefer just the phone for work stuff.  I don’t like having to worry about how I look or moderating my facial expressions and so on if I don’t have to (wearing pants is a big part of this).  The kids love facetiming with my sister and with DH or me when one of us is traveling for work.  And it’s so much easier to understand what they’re saying than when they’re using the phone as a phone.

DH has used his for a lot more stuff.  I’m trying to keep it slow because I easily get addicted to things.  But I do see there’s a lot of potential for life improvements.  (DH has also started using Uber for the airport, which my bleeding socialist heart isn’t crazy about, at least until Uber has more safety/worker regulations attached to it, but I do also really appreciate not having to get the kids bundled into the car late at night or in the wee hours of the morning.)

Google hangout is also pretty awesome since that’s how I keep contact with my RAs while I’m out of state.  Now I don’t have to be chained to the computer if they have a question.  (Also:  when chatting with DH, I only need to make 3 clicks to say “I love you”– it just knows!)

I do think, though, that I’m getting a bit more ADHD about checking the internet now that I have the phone and *can* check it.  Like Scalzi, I’ve been feeling pretty distracted recently and wonder if I should, like him, make some sort of productivity goal before I’m allowed to check the internet.  I don’t know.

One nice thing about paradise is that our internet cable company has this deal that if you use their internet, then when you’re out and about you can steal other people’s internet if they have the same company.  It doesn’t work when a lot of people are trying to steal the same internet, but it has been really nice when we’re out and about when there aren’t too many other people around, especially in residential neighborhoods.  When we get back home, we’re no longer going to have that option so either we’ll stop using the phones so much when we’re away from home (which might be good for say, conversation etc.) or we’ll have higher Ting bills from data usage (and me then forgetting to turn off cell).

So, do I recommend it*?  Well, if you can afford the hardware, having a smart phone is pretty awesome.  Given the hardware purchase, our break even point is a long time from now.  I do kind of wish we’d bought one earlier, but sunk cost, yo.  Ting is working out pretty well for us (though it does not process the friends discount unless you badger them about it, which I find to be kind of obnoxious).  I’m not sure it will work as well when we don’t have as much access to free wireless when we’re out.

Do you have any technological improvements you’ve been enjoying?  How has owning a smart phone changed your life, if at all?  Is there anyone left without a smart phone?

*not that anybody in the world is still sans smartphone (other than #2).

Selfish reasons white men should be interested in equal pay

So I was reading an economic history book by Claudia Goldin (again), and in her chapter on Political Economy of Gender, she talks about why unions have traditionally endorsed equal pay for women (and minorities).

Essentially, the idea is that if employers are allowed to offer women and minorities lower wages, then that is what they will do.  The wages will drop and white men will be unable to find employment or will have to accept the lower wage.  The underlying assumption is that women and minorities are doing the same work as the white men, but are willing to accept lower wages for it.

If men’s rights activists really believe that the world is a meritocracy, and white men are actually the best, then insisting that women be paid the same as men makes perfect sense.  If wages are the same for all workers doing the same work, then, under those assumptions, employers will only hire white men and their wages will stay high.  Women will work at less productive jobs at lower wages.  (Of course, there’s a bunch of new experimental research out that shows that low wages decrease productivity in spot markets– folks are rediscovering the efficiency wage argument!)

These arguments are a bit simplistic and mostly ignore general equilibrium effects, but it is very interesting how the rhetoric around equal pay for equal work has changed.  And how blue-collar white men supported equal pay for their own selfish interests, but now they no longer seem to.

Who benefits from paying women less?  Not the men married to them who would benefit from higher incomes (except, maybe, in terms of balance of power in the household).  Not the men working along-side them.  Employers benefit.

Link Love

As I write this, I have massive hiccups.  I keep trying to muffle them, but occasionally one will sneak out.  mhic mhic mhic HICCUP! mhic

Oh my God, I just can’t even with the Flint water crisis.  This is a 19th century problem that WE SOLVED.  And the effects are so terrible.  Werner Troesken wrote an excellent but horrifying book about it.  I can’t believe this could be happening in the 21st century.  We need a revolution.  Public safety, infrastructure… a new war on poverty a war for public health, public safety.

Also awful from true stories  backward.

This article illustrates exactly the problem with Macklemore.  Eminem doesn’t have this problem because he’s actually GOOD.  (Though Thrift Shop is truly catchy.  But it’s good like All about that base is good, as a one-hit pop wonder.)  So his heart is in the right place, but man, can the Grammies be awarded on merit for a change, instead of to the not as good white guy?

DeRay McKesson is awesome.  I wish this interview could have gone on longer!

The horrible consequences of reporting sexual harassment.  Burn, patriarchy, burn.

So even though isidewith has me 95% with Bernie and 92% with Hillary, I’m going with Hillary (#2 is going with Bernie), assuming I can get my damned voter registration thing figured out for the absentee ballot (my registration is “in suspense” because the post office here sucks and only occasionally delivers mail to us instead of returning it).  This is basically how I feel.  And extra especially this comment from megpie71.

This is a really interesting interview with Sia about crafting pop music.

Go climb that cupboard!

If someone gives you a whole lot of persimmons, this is a good recipe.

How to slice a pizza.  (The answer may surprise you)

This is pretty cool, also exsanguinate is a pretty cool word.

h/t historian for this post whose comments you should definitely read

With the stock market down, now is a good time to do Traditional IRA rollovers/conversions, in case you’re ever thinking of doing a backdoor roth. Why? Because you pay taxes on the earnings and when the stock market is down, you have smaller earnings (possibly even losses)

Policy wonks might be interested in this economics lecture on household finances, wealth, and mistakes.  Related:  why bond prices go down when interest rates go up.

November lessons? from table for one

Very cool money post from a Natural Scientist.

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