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slomo007 said: Figured if I opened a new thread for this the results wouldn't be pretty....so I'll ask here.

I've got an 80/15 mortgage setup. The 15% mortgage has an ugly 9% interest rate. I am considering paying it off via balance transfer (0%, no fee, 12 months). I will be able to reduce it significantly but am nowhere close to being able to pay it off in a year. I know I should be able to find another balance transfer offer and rinse/repeat. But, a bit nervous due to the credit crunch going on, so I'm trying to think worst case scenario here. Would I be able to take the money back out of my house somehow? It's not a home equity account, it's literally another separate mortgage. Is this what a reverse mortgage would be for? A bit confused about how I could re-finance my home after paying off a mortgage (just one of them). Hopefully I won't have to deal with it, just wondering.

You have a HEL now. Choices for taking money back out of your house include:

1. Getting a new HEL (aka second mortgage), just like your 15% @ 9% now but hopefully with a smaller balance.
2. Getting a new HELOC.
3. Refinancing your first mortgage and getting cash out to pay off the remaining card balance(s).

All three of these choices could cost you additional fees. You could be turned down for any of these three things and be stuck paying the higher interest rates on the cards after your 0% period expires.

A more conservative approach would be to sit down and figure out what amount you can pay down over 12 months and only transfer that much of your HEL onto the cards.

You don't want a reverse mortgage in this situation. A reverse mortgage is typically for older folks who have a paid off house and want to receive monthly payments for the rest of their lives.

2Cor521

slomo007 said: Thanks, I don't think I'll have enough equity built up in my 80% mortgage to be able to take that much back out of it. We just moved in to the house in April 2007. But glad to hear I could open another HEL if needed.

If I decide to take the conservative approach and just put what I could pay off on the card....I would still make my normal monthly mortgage payment, along with whatever I can afford to pay back to myself (ie, to the credit card), right? Is that really saving me any interest, rather than just continuing to make extra payments to the mortgage vs making extra payments to the card? I Guess the mortgage interest must be calculated on the remaining balance of the loan, not the total loan amount, right?

BTW, I do realize my monthly payments will be 2% of the outstanding card balance....which is more than double my minimum payment currently on the HEL. I am prepared to handle it...at least I hope so.

If you take the conservative approach I suggested, yes, you would still be making the same monthly payments on both your first and your second, as well as to the 0% credit cards.

Yes, doing it this way will save you interest on whatever you move from your HEL to the 0% cards; as you say, the mortgage company calculates the interest owed based on the remaining balance and not the original loan amount. You should be able to find out from the company that holds your HEL how much of each monthly payment is interest; after you transfer money from the HEL to the 0% cards, the amount going to interest should drop.

You're wise to be concerned about cash flow in this situation. You will build wealthy doing this but only if you don't have trouble with the payments. I tend to be more conservative for this reason.

2Cor521

slomo007 said: If I decide to take the conservative approach and just put what I could pay off on the card....I would still make my normal monthly mortgage payment, along with whatever I can afford to pay back to myself (ie, to the credit card), right? Is that really saving me any interest, rather than just continuing to make extra payments to the mortgage vs making extra payments to the card? Check with your lender. Sometimes when you prepay a HEL, it credits the prepayments as 'regular' payment and pushes your next due date ahead accordingly. IE, if you pay an amount eqaul to 12 monthly payments on Jan 1st, your next payment will not be due until the next year. Yes, the payment reduces your balance (and interest cost) immediately, you just dont have to send in another payment for a while. So if your monthly payment is $500, you could move $6k to a 12-month promo card and not raise your monthly payment committment at all. But you want to check with the specific lender first, and be sure they do allow your loan to go into a 'paid ahead' status.

Glitch99 said: slomo007 said: If I decide to take the conservative approach and just put what I could pay off on the card....I would still make my normal monthly mortgage payment, along with whatever I can afford to pay back to myself (ie, to the credit card), right? Is that really saving me any interest, rather than just continuing to make extra payments to the mortgage vs making extra payments to the card? Check with your lender. Sometimes when you prepay a HEL, it credits the prepayments as 'regular' payment and pushes your next due date ahead accordingly. IE, if you pay an amount eqaul to 12 monthly payments on Jan 1st, your next payment will not be due until the next year. Yes, the payment reduces your balance (and interest cost) immediately, you just dont have to send in another payment for a while. So if your monthly payment is $500, you could move $6k to a 12-month promo card and not raise your monthly payment committment at all. But you want to check with the specific lender first, and be sure they do allow your loan to go into a 'paid ahead' status.

Thanks for the heads up, but that's not an issue for me, at least I don't think so. I've been making extra payments since the account opened and they have been applying to the balance only. I have been making a note on the checks telling them how to handle it though.

I'm not talking about a ton of money (the remaining balance is $21k) so as of now I am leaning toward paying the whole thing off. By my calcs I would have approx $16,500 remaining after the first year. Surely I can find some way to move that small amount around if necessary.

slomo007 said: Glitch99 said: slomo007 said: If I decide to take the conservative approach and just put what I could pay off on the card....I would still make my normal monthly mortgage payment, along with whatever I can afford to pay back to myself (ie, to the credit card), right? Is that really saving me any interest, rather than just continuing to make extra payments to the mortgage vs making extra payments to the card? Check with your lender. Sometimes when you prepay a HEL, it credits the prepayments as 'regular' payment and pushes your next due date ahead accordingly. IE, if you pay an amount eqaul to 12 monthly payments on Jan 1st, your next payment will not be due until the next year. Yes, the payment reduces your balance (and interest cost) immediately, you just dont have to send in another payment for a while. So if your monthly payment is $500, you could move $6k to a 12-month promo card and not raise your monthly payment committment at all. But you want to check with the specific lender first, and be sure they do allow your loan to go into a 'paid ahead' status.

Glitch, one more thing, I have been following your HELOC AOR thread because if I were brave enough I would attempt something very similar. This is my first time dealing with BTs and such so I chickened out and just applied for 1 Citi card and consolidated an older Dividend sock drawer card to get a $21,100 total limit. I then requested a check (today) for $20,600 (will be about $500 out of pocket) to knock out the HEL. My question is, am I being too greedy on the utilization (20,600 out of 21,100)? I have no other Citi cards, and have about $8,000 of unused credit from other issuers. Not sure if they view utilization as a whole, or only utilization through Citi. Would hate to have them reduce my CL and force me to get money quick after paying off the HEL.

I'm not Glitch, but I think the worst I've seen Citi do is lower your CL repeatedly so it's just above your outstanding balance. If they do this, you will always show high utilization on this card, which will impact your credit score and therefore impact your ability to do roll the balance somewhere else in a year (new 0% card or back on the house). I don't think they would decrease your CL below your outstanding balance, if that's what you're suggesting with your last sentence there.

Viewpoints vary, but I think the most popular view on this board is no more than 90% on any card and no more than 50% overall. Some folks are more aggressive, some (most notably Dave Hanson) are more conservative. In my upcoming AOR, my own plan is to do 90% on each personal 0% BT card, (99% - BT fee) on each business 0% BT card, with no more than 50% overall utilization. But you need to determine how risky you're willing to be. In particular, you need to evaluate the likelihood of the CC issuers doing adverse action to you based on what you're doing and on how you compare to others here. I had no adverse action at all on my first AOR about a year ago, but I have a decent income and a strong credit history.

Good luck.

SecondCor521 said: slomo007 said: Glitch99 said: slomo007 said: If I decide to take the conservative approach and just put what I could pay off on the card....I would still make my normal monthly mortgage payment, along with whatever I can afford to pay back to myself (ie, to the credit card), right? Is that really saving me any interest, rather than just continuing to make extra payments to the mortgage vs making extra payments to the card? Check with your lender. Sometimes when you prepay a HEL, it credits the prepayments as 'regular' payment and pushes your next due date ahead accordingly. IE, if you pay an amount eqaul to 12 monthly payments on Jan 1st, your next payment will not be due until the next year. Yes, the payment reduces your balance (and interest cost) immediately, you just dont have to send in another payment for a while. So if your monthly payment is $500, you could move $6k to a 12-month promo card and not raise your monthly payment committment at all. But you want to check with the specific lender first, and be sure they do allow your loan to go into a 'paid ahead' status.

Glitch, one more thing, I have been following your HELOC AOR thread because if I were brave enough I would attempt something very similar. This is my first time dealing with BTs and such so I chickened out and just applied for 1 Citi card and consolidated an older Dividend sock drawer card to get a $21,100 total limit. I then requested a check (today) for $20,600 (will be about $500 out of pocket) to knock out the HEL. My question is, am I being too greedy on the utilization (20,600 out of 21,100)? I have no other Citi cards, and have about $8,000 of unused credit from other issuers. Not sure if they view utilization as a whole, or only utilization through Citi. Would hate to have them reduce my CL and force me to get money quick after paying off the HEL.

I'm not Glitch, but I think the worst I've seen Citi do is lower your CL repeatedly so it's just above your outstanding balance. If they do this, you will always show high utilization on this card, which will impact your credit score and therefore impact your ability to do roll the balance somewhere else in a year (new 0% card or back on the house). I don't think they would decrease your CL below your outstanding balance, if that's what you're suggesting with your last sentence there.

Viewpoints vary, but I think the most popular view on this board is no more than 90% on any card and no more than 50% overall. Some folks are more aggressive, some (most notably Dave Hanson) are more conservative. In my upcoming AOR, my own plan is to do 90% on each personal 0% BT card, (99% - BT fee) on each business 0% BT card, with no more than 50% overall utilization. But you need to determine how risky you're willing to be. In particular, you need to evaluate the likelihood of the CC issuers doing adverse action to you based on what you're doing and on how you compare to others here. I had no adverse action at all on my first AOR about a year ago, but I have a decent income and a strong credit history.

Good luck.

Decent income and strong credit history here also, so willing to take a small risk. If I get a tax refund this year (most likely will) I will apply it toward the Citi card to help with the utilization %.

Glitch99 said: pj737 said: OK, I am getting paid a big check today (12/31/07) for a project that took several months to complete. My question is simple but I am unsure of the answer.

I am receiving the check tomorrow but I have the option to cash it on Wednesday (1/2/08).

From a tax perspective, do I have the option to take the gains in either 2007 or 2008 depending on when I actually deposit the check. Or do I have to take the gains in the year the check was written? You have to claim it as of the day your receive the check. The date on the check and the day you cash it are irrelevant.

But realistically speaking, fudging the date by a day or two will never be questioned (and would be extremely difficult to prove either way).
Not quite true. It depends on your accounting method. It's basically in 2 flavors - accrual & cash. In accrual, you book income (and loss) when it happens, even if you don't realize it ("realize it" in accountant speak). I am not an accountant though. In cash, you book income when you receive it. If you are a large corporation, it's accrual, all the time. For small business, you have to file with IRS which accounting method you want to live with, and can't easily change between two year to year. All individuals, as I suspect OP is, is on Cash basis. I would say it's upto OP to decide when OP "received" payment - when it was written, when it was mailed, when it was received, when it was deposited, when it was cashed - you name it. If you are curious what accrual means - if the OP's project ran for say 3 months, OP could have "booked" payment, say 1/3 every month, without receiving money. Similarly, you accrue liability for services used, and write it off, without having to pay for it yet. Of course, accrual is beneficial to corps who need to write stuff off before they actually pay for it. This won't make sense for most individuals. However, only accrual method of accounting gives a true picture of financials.

deyab said: I would say it's upto OP to decide when OP "received" payment - when it was written, when it was mailed, when it was received, when it was deposited, when it was cashed - you name it.If you say that it is up to the recipient to decide when to claim income, you'd be wrong. The term is "constructive receipt", and it doesnt involve choices. When you receive the check (NOT when it is written, NOT when you cash it) you have been paid, and THAT day determines what year it must be claimed in. As was already noted, if the check was mailed, there can be some degree of latitude as to when you can safely CLAIM to have received it (post office delvery times can vary, or perhaps you didnt pick up your mail for a couple days - as long as you CLAIM a date between when it was mailed and when you cashed it, there really is no proof to the contrary). But the rule itself is very clear - the day you receive the check is the day you claim the income.

deyab said: Glitch99 said: But the rule itself is very clear - the day you receive the check is the day you claim the income.Sorry, never heard of that rule. Where did you get it? I have been doing taxes for myself, 2 S Corp that we own(One cash, one accrual) and one Limited Partnership that we own. So I do claim to know a little bit. What if the check bounces? As long as someone is consistent in booking income, it should be alright, as we are only talking about a few days between when check is written till it is cashed and settled.
Glitch99 is correct. The IRS defines "constructive receipt" in Treas. Reg. § 1.451-2(a):

General rule. Income although not actually reduced to a taxpayer’s possession is constructively received by him in the taxable year during which it is credited to his account, set apart for him, or otherwise made available so that he may draw upon it at any time, or so that he could have drawn upon it during the taxable year if notice of intention to withdraw had been given. However, income is not constructively received if the taxpayer’s control of its receipt is subject to substantial limitations or restrictions.

deyab said: If my employer wrote me a check, I must wait till it's cashed, but my employer would make the decision for me and include it in same years W2. Again, no. Your employer includes it according to the pay date. If pay day is 12/31, they distribute checks on 12/31, and the income is recieved 12/31. There is no decision to be made. There is no leeway.

deyab said: Glitch99 said: deyab said: If my employer wrote me a check, I must wait till it's cashed, but my employer would make the decision for me and include it in same years W2. Again, no. Your employer includes it according to the pay date. If pay day is 12/31, they distribute checks on 12/31, and the income is recieved 12/31. There is no decision to be made. There is no leeway.

Uh.. I probably should have worded the last sentence better. The OP is NOT an employee. He is getting paid for a multi month project, clearly a contractor. OP does have discretion.Your wording has nothing to do with anything. Employee, contractor, or anything else, it doesnt matter. A check IS the payment. When a check is in your hand you have received payment. The income has been recieved as of that day. That is the day the income is realized. There is no leeway, discretion, or any other gray area to interpret.

The only other option is if the OP matches income to the same period in which any related expenses were incurred (if 70% of the expenses were incurred in 2007, 70% of the revenue is attributed to 2007) - but this too leaves no discretion, the rules still dictate when and how income is accrued.

deyab said: I am not an accountant. I am replying to this post based on my personal experience.This isnt a question about personal experience, its a question about the rules. When responding to fact-based questions, you should provide facts, not opinions based on personal experience. How you've decided to do it is not relevant to how the IRS clearly states it is to be done.

I'm 22 years old and I'm about to start my first 401k plan in February. It looks like my company's plan is pretty crappy...there are 14 funds, and 7 of them have Morningstar ratings of 1 or 2 stars.

Of the remaining options, 2 look pretty good and the rest look decent. No index funds, unfortunately. Fees look way too high to me, but since they're all through Goldman Sachs, I can't do much there.

I make ~33k, and I intend to contribute 4% of my paycheck, which maxes out the matching contribution. (100% of first 4%, fully vested) I'd put more in, but right now money's tight because I also wanted to max my 2007 Roth IRA contribution.

My question is, if I only plan on working with the company for another year or two, how should I allocate my funds? My thinking is, if the plan is so crappy, I'll probably want to roll over to an IRA when I leave my job. In that case, I'd better stick mostly with short-term funds like a money market fund, right?

I don't want to be a timid investor, in general, since I've got so much time left till retirement, but I don't want to do a long-term fund when I'll only be in it for a few years at most.

Any suggestions? Proposed breakdowns? Further info needed? Thanks!

dcwilbur said: bula said: I am leaning towards a 12 month cd because I know I will have a lower tax burden in 2009.Tax is due on interest EARNED during the year, even if it isn't paid until the CD matures. If you take out a 12 month CD today, you will get a 1099 for 11 months of interest in 2008, even if the interest isn't actually paid until 2009.

Sorry, dcwilbur, but that isn't correct. Tax is owed only on the amount of interest paid during the year, not on the amount of interest accrued. If someone were to open a one year CD today that pays all the interest earned on the CD at maturity, there would be no tax due for that account for 2008 since all of the interest would be paid in 2009. No 1099 would be issued for 2008 for the CD. The 1099 for 2009 would be for the entire 12 months of interest.

uglymonkeybutt said: How do you search morningstar for a specific fund? I tried to type my 401k fund's ticker (e.g. GITAX or GOIAX) into what I ASSUME to be the seach box, and nothing came up.You should see two search boxes near the top left, you want to enter ticker symbols into the box labeled "Quote".

I have a CitiProfessional card whose CL I reallocated about a year ago after issue, and left it with $1K. When their system got around to offering up a CLI 6 months later, it offered up $500. I took it, of course, but am wondering if anyone with Citi experience knows what they like to see to offer bigger CLIs? This Citi card is currently sockdrawered.

Virtually all of my other cards are heading towards $25K CL (each).

On a related note, have a new & sockdrawered GEMB Net Rewards Visa that was issued at $3500. What do they like to see to offer up CLIs?

I have posted the question that Glitch99 and deyab is disagreeing on at the Tax thread. The pro there should have a better handle on the issue.

ucbedge said: Which online savings account do Fatwalleters recommend the most? I have ~$25K in Emigrant Direct since it was the darling of the FW world two years ago. Has it fallen out of favor? What does everybody recommend?

FNBOdirect is still at 5.05% for $1+

I think Countrywide is at 5.25% for $10k+

not sure where any online accounts will be after the FOMC expected Rate cut at the end of the month.

1 - yes
2 - yes
3 - Yes, as well as online.

swishyx said: Re BofA Business Power Rewards Visa:

(1) do they ever auto-CLI?
(2) is there an online method to request a CLI (can't find one)
(3) If you call in to request one do they hard pull?

uglymonkeybutt said: I'm 22 years old and I'm about to start my first 401k plan in February. It looks like my company's plan is pretty crappy...there are 14 funds, and 7 of them have Morningstar ratings of 1 or 2 stars.

Of the remaining options, 2 look pretty good and the rest look decent. No index funds, unfortunately. Fees look way too high to me, but since they're all through Goldman Sachs, I can't do much there.

I make ~33k, and I intend to contribute 4% of my paycheck, which maxes out the matching contribution. (100% of first 4%, fully vested) I'd put more in, but right now money's tight because I also wanted to max my 2007 Roth IRA contribution.

My question is, if I only plan on working with the company for another year or two, how should I allocate my funds? My thinking is, if the plan is so crappy, I'll probably want to roll over to an IRA when I leave my job. In that case, I'd better stick mostly with short-term funds like a money market fund, right?

I don't want to be a timid investor, in general, since I've got so much time left till retirement, but I don't want to do a long-term fund when I'll only be in it for a few years at most.

Any suggestions? Proposed breakdowns? Further info needed? Thanks!"Short term" means you will be needing access to the money soon. Your situation is still "long term" - you aren't planning on using the money, just transfering it to a different account.

You arent counting on having $XXXX on a certain date; you will just roll over whatever the value is at the time you roll over, and keep going. So unless you plan on withdrawing and spending the money soon, keep investing long term even as you move the money from account to account.