A recap of the episode with BigERN, how to save money on your car during the lockdown, and a dive into the mailbag!
- Have We Seen The Bottom With Big ERN
- Should I Refinance My Mortgage?
- Rebuilding A Life You Love With Christine
- Chase Sapphire Preferred Card
Table Of Contents
Big ERN Recap
Looking back at the episode with Big ERN Brad and Jonathan were pleasantly surprised at how optimistic Big ERN was in regards to the economy.
No businesses planned for income going to zero. Even in the worst case disaster planning businesses don’t envision the complete and total loss of income for extended periods of time. Big ERN is optimistic about the economy providing we can get back to business before things go into a “death spiral”. The more businesses that go under because they have exceed their reserves the less likely there will be a quick recovery.
People are itching to get out–there is a pent up demand. When things go back to normal the economy will spring back–unless too many businesses went out of business during the shutdown.
Hey guys, thanks for all that you do for the FI community. Quick question: Jonathan on a recent pod you mentioned paying off your mortgage early is a current focus for you. I’m curious as to your strategy for doing so. Are you making additional payments each month? Are you putting that extra money in the market to earn a bigger return, similar to the strategy used by one of your guests, Ariel? I think I’ve run every possible scenario on how to put my extra funds to work and I’m still confused on the best option. Any insight on your chosen path would be helpful. Thanks. — Jeremy
Jonthan is actually not paying his mortgage early. He’s investing that money instead. It is part of his investor policy statement that he will pay off his mortgage before he begins drawdown.
He also recently refinanced at 3.25% 30 year fixed mortgage to lower his payment. The monthly amount he saved is being invested with M1 Finance. He’s actually thinking about setting up a special pie just for the money he’s sending in lieu of paying off his mortgage.
He’s looking at his taxable investments this way:
- Short term “might need it at any time” money would be invested in a very conservative pie with M1 Finance.
- Extra money he would have gone to the mortgage–the he would need in about 15 years–would be invested in a moderately conservative pie.
- Long term investments would be invested aggressively.
Brad sees this as the best of both worlds. You are getting the psychological benefit of knowing you can pay off the mortgage at any time but still making the most of market returns–making the fairly safe bet that the market will return more than 3.25%
Listen: Should I Refinance My Mortgage?
If you have a question you’d like answered on the air shoot an email over to [email protected].
Saving Money On Your Car
Christine from episode 137 posted in the Facebook group that she was able to put one of her cars on hold with her car insurance since they don’t need two cars right now. You can check out the full thread here.
You can actually put your car insurance for your car on hold if you are not going to be driving it. When your car is on hold you can not drive it. You are still insured as a driver so you can rent a car, or you can borrow a friend’s car–but you can not drive the car that has been placed on hold.
You also must be able to commit to not driving the car for at least 30 days. It’s also not feasible if you have a loan on your car or if the car is leased.
A lot of insurance companies are automatically giving discounts during this time since their claims are down while everyone stays home. If you’re not sure if your insurance company is making allowances for this time give them a call and ask. It might also be a good time to shop around for new car insurance.
This might also be a good time to get a deal on a new car if you are in the market. Reshawn from episode 167 had great tips for buying a new car, check that out here.
Quarantine Story From China
Ally called in with an interesting story of what her life has been like in living in quarantine in China. She said the first few weeks were kinda fun, that it felt like a vacation. But after three or four weeks the vacation feeling wore off and it became quite stressful.
They’ve struggled to balance working from home and parenting but one good thing has been the unexpected savings. Not leaving the house means spending a lot less money. They were able to save an extra $750 in March and have also pared down their cost per meal to $1.50 per meal per person and would love it get it down to $1.25 per person per meal.
They have also cut their electric bill by 75% by buying some cheap fans and refusing to turn on the AC. They have also been air drying their clothes instead of using the dryer.
They have found the local ChooseFI community, which has helped them stay sane during this time.
Jared called in with his recent wins. He’s 24 and is graduating from the Air Force in a few weeks. They are going to send him to get a masters degree in Latin American Studies at UC San Diego. This will mean he will have gotten a free undergrad and free graduate degree from the military.
His goal is to be FI at age 32.
He has cut back on impulse purchases by putting them on a 72 wait list. He has also been using his USAA credit card to build his credit, but got approved for the Chase Sapphire Preferred Card recently!