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Posts Tagged ‘Line of credit’

Eliminating Private Mortgage Insurance–An Update

Since I earned over $1000 with blogging in December, I thought I would try to pay off some principal on a rental house and eliminate private mortgage insurance (PMI) since I had read that once you had paid off the loan to 78% of the purchase price, you could do so.  I called the company that services the mortgage and found out some things that I did not know.

First, I found out that my mortgage was owned by Freddie Mac.  That was somewhat disappointing given all of the bad press in recent years on the quasi-governmental institutions that have been bailed out.  But then again, I don’t know what else I should have been expecting, so for all practical purposes, it is neither here nor there.

I also found out that I need to pay down the loan to a much greater extent with a rental than I would with a primary residence.  That makes sense since investment property is considered more risky and demands a higher interest rate for the mortgage as well.  Make sure you compare mortgage rates to get the best deal.  However, I was somewhat shocked that the requirements for Freddie Mac are a 65% loan-to-value.  The bottom line is that I don’t have $15,000 lying around to simply eliminate PMI.  I would save $66 per month or $792 on a $15,000 investment giving me a yield of just over 5%.  Certainly not the best use of funds even if I did have them.

Going With Plan B

Or should I say, “Back to the original plan”?  The original plan was to pay off a business credit line with an 18% interest rate.  At the time, the balance was about $1000 with a most recent monthly payment of $68.  Over the next year, then my cash on cash return would be $816 saved in payments for a $1000 investment which does wonders for the monthly spending plan.

So, that is exactly what I did.  I paid off the business credit line and will next start working on paying off the Discover Card as I had mentioned previously.  I won’t be making any significant progress on that credit card balance this month since I haven’t quite earned $1000 yet and will be spending some of my blogging income on paying authors for the new blog and for funding my recent contest.

However, I hope to make a decent dent in the Discover Card balance in February since I have little anticipated blogging expenses other than paying authors and hope to make close to $1000 in that month as well.  It has been a rough few weeks from a revenue standpoint, but I think that I can expect blogging income to be variable with some ups and downs.

Paying More Than the Minimum

I am already paying more than the minimum.  Since I have been doing my best not to add to my overall credit card balances, as the minimum required payments on some of the other cards decreased, I shifted the difference to the Discover Card so that I am still making a decent sized payment each and every month without adding any of the blogging income.  Now that I have paid off a business credit card and a business line of credit, I should be able to make more rapid progress on the Discover Card.

Then it will become a matter of figuring out the next debt to tackle and so on and so forth.  I can only hope to maintain the intensity (which I think I will do) and avoid any of those nasty financial surprises that can derail even the best of plans.

Wish me luck!

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16 comments - What do you think?  Posted by Cash Flow Mantra - January 25, 2012 at 9:38 am

Categories: Credit/Debt   Tags: , , , , , , ,

SMART Financial Goals for 2012

I have divided up my goals for 2012 into two main categories, financial and personal.  This post will only concentrate on the financial goals, and I will take a future post to write up some of my personal goals for 2012.  Now there are a few parts to these financial goals so I will do my best to break them out for you and elaborate a little bit on each aspect.

SMART Financial Goal #1:  Pay off some debt.

Now that is not very specific so let’s improve upon this, shall we.

S:  Eliminate PMI on the rental house.  Pay off the business line of credit.  Pay off the Discover Card.

M:  I need $960 to pay against the principal in order to eliminate PMI.  The current balance of the business line of credit is $950.  The Discover Card balance is just over $8500.

A:  I think all three goals are attainable.  I plan on using blogging earnings for this debt elimination since these earnings have not been figured into my life and represent extra funds.

R:  Considering the fact that I made over $1000 gross for the last 2 months blogging and will be striving for $30,000 in 2012, I think that netting about $10,000 should be fairly realistic.

T:  The PMI is essentially a done deal.  The money has already been transferred from PayPal and simply needs to be sent to the mortgage company along with appropriate written instructions.  I will be calling them later today.  I have enough money to pay for the first 2 months of author expenses of Grand Per Month set aside so any revenue during January and February could go right toward the business line of credit.  By the end of February, that should be paid off.  That will give me the remainder of the year (10 months) to pay off the Discover Card.

SMART Financial Goal #2:  Make $30,000 in 2012 through blogging.

S:  Specifically, I want to gross $30,000 for the year and net at least 75% of that or $22,500.  This will be enough to help me accomplish the above financial goal of paying off the designated debts.

M:  Well, yes it is measurable.  Dealing with numbers make the measuring part fairly simple.

A:  Yes, it is attainable.  There are many bloggers making consistent earnings around $1500-$2000 per month.  With 2 blogs, it is certainly possible.

R:  This is where it gets a little sketchy.  For me, it will be a stretch I admit it.  I think so mainly because of my difficulty attracting traffic online.  I am getting better, but the question remains whether or not I can grow the blogs and the earnings quickly enough during the course of the year.  But I am definitely thankful for all of you who consistently read this blog day in and day out.  I am also thankful for the great enthusiasm with which Grand Per Month has been received.  So, we shall see.

T:  By the end of 2012.  I have a schedule of earnings that will get me there so I can know whether or not I am on track each and every month.

So, these are the two main financial goals that I will be focusing upon in 2012.  I have a few others like not adding to my other credit card debt, and increasing the dividends in my retirement account but those plans either aren’t quite as specific (no additional credit card debt) or have already been written about (dividend plan).  On the other hand, the goals above will require fairly active management throughout the year so will require some extra focus.

Readers:  What are your financial goals for 2012?  Feel free to share in the comments below.  Here is to a great 2012!

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23 comments - What do you think?  Posted by Cash Flow Mantra - December 28, 2011 at 5:30 am

Categories: Earning, Credit/Debt   Tags: , , , , , , , , ,

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