However, after a few phone calls, I found out that we were in an excellent position for this trip because of the following:

Our “Big Bank”

I’ve been a Bank of America member for about a decade now, and while I was very close to killing my account recently from their attempt at a $5 fee for debit card transactions, I decided it wasn’t worth the bother. I’m glad I didn’t because one of the major banks in Germany, Deutsche Bank, is part of the “Global ATM Alliance“, and thus we didn’t have any ATM fees.

One thing when you’re dealing with foreign currency is to make sure you don’t withdraw too much because you might get stuck having to exchange it back to US dollars and paying another fee.

Your best bet is to use a credit card…

Our Credit Union

While we have a number of credit cards, they all had foreign transaction fees (FTF’s), which can range from 1%-3% (or more for some seedy credit companies).  But while calling through our credit card companies to find out the best option, I found out that recently our Pentagon Federal Platinum Rewards Card dropped the foreign transaction fee! Not only that, but I learned that the card also offers 5% cash back on gas all the time. When I first got the card, it was 3%, but I hadn’t checked up on it until I heard a radio ad for the card and heard 5%.

So with a combination of a big bank and a credit union, we were able to avoid a chunk of fees during our stay overseas. Capital One and AmEx used to be your only choices for cards with no foreign transaction fees, but now Pentagon Federal Credit Union has joined the mix

Just to recap our debt/mortgage/etc. situation for you all if you haven’t followed this site for the last 4.5 years, we’ve done the following:

1. Paid off all our credit card debt
2. Paid off all our car loans. This included any negative equity rolled in from prior car loans. Right now we’re at 2 vehicles: a 2006 Honda Ridgeline and a 2007 MINI Cooper S (oh, I didn’t mention we upgraded from our 2005 MINI Cooper, but it was paid off quickly)
3. Paid off our student loans, which made us free of consumer debt
4. Paid off our second mortgage as of this month!

When we bought our house in the D.C. area back in 2004, we had much less income, mediocre credit scores and history and a ton of consumer and student loan debt (over $100,000). But the bank approved us for about $400,000 across 2 loans:

1. The primary mortgage was 80% of the total home purchase price, is interest-only for 10 years and a fixed interest rate for 5 years. We’re past the 5 year mark, so it’s now variable, based on the 6-month LIBOR, which has brought our rate down from 5.25% to 2.75%, with little chance of jumping up a huge amount in the next 6-12 months based on the rate trending.
2. The secondary mortgage was the other 20% and was a fixed rate of almost 8%! It was a 15 year balloon payment, due in late 2019, but we paid it off almost 9 years early.

So after learning that we needed to send a certified check to pay off the loan rather than just a regular check like we’ve been doing for 6 years, I called in for a payoff amount, went to the bank to get the check (and rounded up to ensure coverage of any interest in case the mortgage company was slow to process the payment) and then mailed out the payment to the appropriate address (not the normal mortgage payment address).

Last night, I logged in to the mortgage company site to check on the loan and here is what I saw:

So what’s next?

Ok, we have just one piece of debt left, so that means we’re going to pound away at our mortgage until it’s paid off decades early, right? Well, it’s not that simple. The issue is that the loan is only 2.75%, so we’re going to focus more on fully funding our 401k’s and Roth IRAs, filling up our savings accounts for various savings goals such as home repairs, new car (way down the road), and a general emergency fund.

We’ll keep an eye on the trending of interest rates, but right now we’re saving hundreds on interest with the variable rate, but we know it can’t last forever, but we can’t justify the costs associated with refinancing and when the new loan would most definitely be 2-3% higher than our current rate. The more cautious reader would say take advantage of rates now as they will only go up, but in our case, we aren’t positive we’re going to stay in this home forever, so yet another reason to hold off on locking in on a long-term loan with a higher rate.

Anyone else in this boat? How are you handling the risk vs benefits conundrum?

Sending in extra payments

We’re on a monthly payment plan, not one of those “pay twice a month” deals. Our payment is due the first of every month.

Now, I use online billpay with my bank to just send a check directly to the bank without the paper slip from the bill. But what I learned a few years ago when I tried to make a SECOND payment in the same month as one I already paid for was that the mortgage company applied the payment to the next month’s interest first, thus resulting in much less principal reduction. I was expecting the entire amount would go towards principal rather than the next payment, so I called the mortgage company.

You know what their rule is about sending “extra payments”?

You need to send the extra payment to a different mailing address.

Whahuh? If I’m sending in an extra amount well before the next due date, and the amount is not even close to the regular payment amount, then I would expect their “system” to recognize the intent is an accelerated loan payoff. But no, they want to strip out all the interest first and apply it to the next month no matter what.

I’m sure it makes sense in some financial world somewhere, but to me it’s idiocy. Therefore, I plan around it by just sending the extra payment in with the regular mortgage payment (same check) and avoid this special second address.

Can anyone explain the reasoning the mortgage company might have for this type of action? I should also add that including the memo “apply full amount to principal” or anything similar doesn’t work. You HAVE to send it to the other address.

Well, it’s 6 years later, and we have excellent news. We’ve paid off about $1500 of our first mortgage! No wait, that’s not the good news. The good news is that we’ve been fortunate enough to have, and keep getting, good, well-paying jobs as well as get a decent amount of side-income from some websites such as this one.

With that income, as well as tightening our belts and cutting expenses, we’ve been able to pay off over $110,000 in consumer debt and student loans. As of November 2009, we’ve been debt-free except for our mortgages…but that’s going to change soon, sort of. In addition to paying off all that debt, we’ve been focusing on paying off our second mortgage, which was almost $80,000 (we live in D.C.), which is a high-interest loan and stood between us and 20% equity in our home.

Well, we were supposed to have paid off the second mortgage right about now. I sent in the final payment of about $5k well in advance of month-end, and then kept checking the lender’s website to see the magic $0. But day after day came and it kept showing the same amount. Then I noticed that the first mortgage payment got credited, so I called the lender.

Know how to pay off your mortgage properly!

What I found out, although I don’t know how I was supposed to know this as I thought every payment was handled the same, was that the mortgage company requires a certified check and a payoff letter for the final payment. They bounced back my check, and I had to quickly send a check for the regular payment just to make a payment within the grace period. So now I have to wait for their payoff paperwork to come, go to the bank to get a certified check and then mail them in.

My biggest disappointment was that I got my wife so pumped up that we only had one loan left (which will probably never get paid off), and then have to let her down that I screwed up and didn’t follow the rules. Well, shame on me for assuming this was like any other payment. What happens if I sent just enough to have 1 cent left on the loan? Would they require a certified check then?

So, while I was hoping to surprise you all with the news that we paid off another $80,000 in debt in just 6 years (along with the other $110,000), I have to wait another month or so. But at least I was able to inform you enough to call your own mortgage company to find out their rules on loan payoffs.

Let’s see how many checks I’ve been writing:
2004: 95
2005: 96
2006: 41
2007: 19
2008: 32
2009: 17

2010: 12

I’ll reiterate that the only times I use the checkbook is when we have a service tech visit the house and they want payment right then, or if we’re donating to charity or giving gifts and there’s no other alternative (We won’t mail cash).

So we’re still stuck using checks, but at this rate, we’ll be using our current box of checks into the next decade. However, there are still many people out there who love to whip out their checkbook at the grocery store, or they just have no other alternatives like credit or debit cards, so I can’t hate on them too much.

But the concept of “the right to write checks“? Really? Apparently, unbeknownst to me as I don’t use my checkbook at stores is that many vendors don’t accept checks as a form of payment. Well, back in college, I worked at a clothing store and we saw many bad checks cross our counter, and tracking them down to get payment proved almost impossible. With the current proliferation of credit and debit options, it seems almost suspicious for someone to be paying by check, don’t you think?

But while watching one of the videos on the site, I caught someone refer very briefly about insurance against bad checks costing half a percent versus the 2-3% in fees for credit processing. I couldn’t find much in my 5 seconds of research on the topic, but if such an option were available, inexpensive and reliable, then many more businesses should opt for it. It just depends on the type of business you run, the average cost of a sale and your risk aversion.

But should businesses be required to accept checks? I know many governmental entities only accept cash, checks or money orders, or charge exorbitant fees to process a credit card transaction (I know from experience), so there’s still a need for checks out there, but one day, maybe sooner than we think, paper checks will go the way of the rotary telephone. What, you never had the joy of having to spin a dial 7 times to phone someone? Only your great-grandma will still be using checks. Kids today don’t even know how to write a check!

So while those of us 30 and above know the history and love/hate of checks, I personally don’t think we should have a “right to write checks” because I simply prefer other means of payment that are more convenient, secure, and offer rewards. The next step, which is already prevalent in Africa, is payment via cellphone. Supposedly one day the credit card will be history!

What do you think? Are you still using checks regularly? Have you been able to go check-free? Oh, let me throw in a little kicker first though…don’t think that by using online billpay from your bank that you’re free of paper checks. Very few of your online bill payments are fully electronic; your bill is still being paid by a paper check!

Reader “DD” has the following two unrelated questions (I corrected grammar to make it a bit more readable):

1)I have a  job where I’m getting new clients with frequency,but I don’t feel Ok. The environment is not motivating.It is too controlling. Financilly I’m doing ok, but the job is really getting too stressful from the moment I get to work in the morning. So, I was thinking of getting another job outside of my country,even when i know is risky, but i’m confused.What do you suggest?

2)Is it true that investing is better than saving?

Wow, #1 is a heavy question, and one that I have also considered, although not too heavily considering we have it pretty good here in the U.S. Now, I don’t know what country DD is in, or even what continent, so it’s hard to say how easy emigrating is from your country to another is. For example, going from the U.S. to Canada is a bit easier that, say, Israel to Syria. Therefore, I’ll try to answer in more general terms and let you do the legwork on the laws of the country(ies) you’re considering immigrating into.

From a risk perspective, of course it’s risky to pack up and leave your country of residence, whether you’re a citizen or not, and especially if you have family involved in the move. But the question I first have to ask is “is the job that bad and the economy that horrible you can’t find something else in your country?”

I’ve thought of moving to someplace like Ireland (when it was the Celtic Tiger) because I had memories there from our honeymoon and another visit, but I know how hard it is to leave my family and familiarity here in the U.S., so the idea dropped off the list.

So, the questions to ask yourself are:

• Can I find something better where I am? What if I move to a different town? Does it really require that I move to another country?
• What will I be leaving behind? (family, friends, a good reputation)
• What problems will I run into? (immigration constraints, language barrier, cost of living changes, problem getting work as an immigrant, too many people in my line of work already, etc.)

It’s easy to jump ship and think the grass is greener on the other side of the border, but look more locally first. If it’s a bad crowd you’re trying to get away from, try a different town. It’s much cheaper and easier to move within a country that between them, right?

Hopefully I helped you with some of the thinking process to help you get to a decision. Sorry I couldn’t help further without more information.

Now, onto your second question: Is it true that investing is better than saving?

In two famous words: It depends. Granted, right now the savings rates are crap, but the market is at a high (although it can always go higher), so buying now means more risk or probability of losing money if/when the market falls. A few questions to ask yourself here are:

• Do you have an emergency fund? If not, then saving enough to pay for 3-6 months of non-discretionary expenses (housing, utilities (not cable), groceries, etc.) is a necessity right now because you’re at risk of going into deep debt or ruining your credit if something bad happens and you can’t pay your bills. Now, in our situation, we have 2 incomes and no kids, so we’re at less risk because there’s less chance we’ll both lose our jobs at the same time. Plus, we have little debt (relatively) and about 6 months of living expenses. If I (the main money-maker) were to lose my job right now, we could live off my wife’s salary without digging into our emergency fund. It took years to get to this point though.
• If you do have a decent emergency fund, do you have other goals for which you need to save? For example, if you’re planning on moving out of the country, how will you fund it? Credit cards? I have different ING Direct accounts for Travel, Car, Home Repairs/Renovations and a general Emergency Fund. Those are mostly funded to my satisfaction, so I can move onto the next step…
• Investing. It depends on if you’re talking about buying shares of a company out on the open market or contributing to a retirement account (401k, 403b, Roth IRA, etc.) or investing in life insurance or lottery tickets. Now that we are funded with our savings goals (almost), we can refocus on investing. For us, that means fully funding our Roth IRAs this year, which we’ve lapsed with in prior years, and fully funding our 401ks. I’m taking advantage of employer matching contributions and tax deferrals as much as possible before even considering investing outside of these accounts.

So again, I can only provide some additional questions to ask yourself, since I don’t know your specific situation, and then provide some insight into our own lives. Generally, you want to be sure you’re secure right now then work on your future security. Don’t get caught up in the fever of buying stocks or gold because it’s “the hot thing” right now, because most often by the time you buy “the hot thing”, it’s cooled off and you bought in the peak market (like we did with our home).

So overall, my advice is to 1) look local first for a new job or career and 2) make sure you have at least an emergency fund before really getting into investing. However, if you can get a company match on your investment contributions, then do the minimum required to get the full match and use the remainder for savings.

Any other advice from my fellow readers and writers?

I just loaded up on some more $25 ING Direct referral links, so if you don’t have an account yet (and you’re interested in one) keep reading…

Your bonus for opening an account is $25 (and $10 for me) with a minimum opening deposit of $250. That’s an instant 10% return on your money

To receive this $25 bonus, you have to use one of the links below and you must be a new ING customer opening an account with at least $250. That means you can’t already have an ING Orange Savings or Electric Orange Checking account.

Orange Savings Account Referral Links

• Open ING Direct Orange Savings – Link 1
• Open ING Direct Orange Savings – Link 2
• Open ING Direct Orange Savings – Link 3
• Open ING Direct Orange Savings – Link 4
• Open ING Direct Orange Savings – Link 5

If you click on a link and it says, We’re sorry, but the referral link within the email you received has expired and is no longer valid. We recommend that you contact the sender and ask them to re-send the referral email. Or click Continue to proceed with the application process without the account opening bonus. Then the link has been used and move on to the next one (I’ll go ahead and clear it out soon).

Happy savings!

NOW GO GET YOUR $25!!!

2004: 95
2005: 96
2006: 41
2007: 19

But we seemed to have stagnated in 2008 and 2009, even going up last year:

2008: 32
2009: 17

What I want to know is when can we stop writing checks??? Will I always need to keep a checkbook? While I use credit cards for most purchases, there’s still a few places where I still have to write a check:

• City of Rockville, MD for trash, water and sewer (every 3 months). C’mon, get with the times and accept online payments already!
• Some repairmen, such as our HVAC company when they make house calls. It’s either cash or check, but they do good work, so I stay with them.
• Gifts (mostly nieces and nephew) for birthdays/baptisms/etc. While cash is nicer, it’s even less convenient to go to the ATM than to write a check, and I figure there’s more of a chance the money will be saved than spent if it’s deposited into the bank first.
• Maryland MVA (DMV). I got Stacie an alumni plate for her MINI as a surprise and there was only a check/money order option. Regular renewals are done online though.
• Charities. If I want a paper trail of a donation, I’m paying by check or credit card, and many charities still don’t accept credit cards.

While I have an ING Electric Orange checking account (the link is for opening a savings account and getting $25), I’m still not comfortable with not having the check book option in those instances I don’t have cash and the other party doesn’t take credit. Eventually I foresee cellphone payments as an option (the iPhone already has a payment app), but in the near future, I have to continue keeping this stupid check book.

What do all of you think?

I’ll admit it’s difficult to review a dictionary, and I’m definitely not going to read through the whole thing, but I picked out a few key terms, and skimmed through others, to see how David defines each.

What makes this dictionary different than just Googling the search term, or looking it up on Dictionary.com? Well, not much, but you do get focused financial articles such as “How to buy a home”, “Understanding your credit score”, “Top 10 money mistakes that people make”.

However, I’m not going to try to write a glowing review for one reason. While this is a great resource to have, I foresee only a niche audience who would actually need to BUY a copy and use often. For the rest of us, it may just take up space on our bookshelf as we just find the answers online. But on that note, I’m going to give TWO of you an opportunity to win a FREE copy and see for yourself if it would have been worth buying.

And Now for the Book Giveaway!!!

The contest is closed and the winners notified. Check back to find out who won!

Leave a comment on this article by 5pm EST on Saturday, October 24th, 2009. I’ll use a random integer generator to draw 2 winning numbers, and then email the winners to make sure they’re willing to claim their prize (i.e. send me their mailing address). The winners will have 48 hours to get back to me to confirm, or I draw a new winner. Once confirmed, I’ll announce the winner in a new post.

Feel free to subscribe to my RSS feed or email newsletter to learn when the winners are announced and when I post another giveaway.

Contest Rules

• I only ship to the the U.S.  Don’t complain, it’s on my own dime.
• I will ask for your name and address for shipping, but I promise to destroy the information and never sell/share it
• Void where prohibited by law
• You can only enter ONE TIME. If I draw your name and see you’ve entered already, I’ll delete your entry and redraw.

Now comment! This is the most frugal way to get this book. It’s even delivered right to your doorstep (at my cost)!