We saved quite a bit of holiday budget to wait for the expected after-holiday sales. That was part of our plan ahead of time. Since then, we have been looking through bargains worth picking up. It???s not about being overly frugal, but simply smart shopping. In fact, we bought a large LCD TV over the holiday. We also sold or gave away some stuff on Craigslist to those who can need some stuff more than we do.
As consumers, we are all trying to make do and get as much as possible for each dollar spent. Lately my family and I have been doing more research before buying anything, and have also done more online shopping and looked harder for better deals. As mentioned previously, we have not stopped spending, however.
One of the online sites we have found to be useful is:
http://www.uberi.com
They do have some interesting bargains listed that are not available even on price search engines. We were able to get more for each dollar. Hope that's useful info for some.
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Lower Expectations
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Still, America's interest-rate limbo could wind up putting big money in my pocket. To figure out how much money I'd save by refinancing, I plugged my mortgage balances into an online calculator to come up with the "blended" interest rate that combines my two loans; the numbers suggest this average rate is around 5.7 percent. Using a basic online mortgage calculator, I tried consolidating both balances to a 4.5 percent 30-year loan. The calculator says I'd save more than $1,000 a month. (I was surprised the savings were so significant; however, that results not just from the lower rate, but from extending the term by converting my existing 15-year first loan into a 30-year obligation.) Even if I roll both loans into a new 15-year mortgage, which some lenders are now offering for below 5 percent, I'd save a few hundred bucks a month and still pay off my second mortgage faster than I would otherwise.
What's my best bet? I'm waiting for my mortgage broker to get back to me, but for now my guess is I'm probably going to hold off and continue watching rates closely. If the chance to refinance at 4.5 percent really does materialize, I'll probably grab it and then figure out if it makes sense for me to make higher payments in an attempt to pay down the loan in less time.
As a consumer, any of these options sound swell to me. As for the public-policy implications, however, I'm not yet totally convinced this makes sense. I'm all for the government doing what it can to help troubled borrowers stay in their homes. And as I've argued before, I think the government should be doing more to push through loan modifications for homeowners who are close to losing their homes. As for the rest of us, there's no question that putting extra cash in homeowners' pockets would be good for the economy right now. Experts like Hubbard and Mayer have argued that with the government able to borrow funds at 2.1 percent, they might still earn a profit on 4.5 percent mortgages.
Still, skeptics envision such a deal costing the government many billions of dollars over time. Some worry about the government stepping in with a scheme to prop up home prices and argue that it's better to just let prices stabilize at wherever free-market equilibrium happens to lie. As for me, I'm a bit leery of any stimulus plan whose effects will linger for decades to come. So, philosophically, this jury of one is still out on this debate. But if rates continue heading down, you can bet I'll be happily taking advantage of them. For me, decades of lower mortgage payments beats anything Santa can leave under the tree.
Daniel McGinn is a national correspondent at NEWSWEEK and the author of " House Lust: Americas Obsession with our Homes. "
© 2008
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