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Home > August 2010 - With an adjusted rate of 3.25% should I pay down more principle?

August 2010 - With an adjusted rate of 3.25% should I pay down more principle?

September 17th, 2010 at 07:16 pm

Cash & Savings: $127,031 (9.21%)
Foreign Currency: $29,870 (0.15%)
US Brokerage: $104,925 (3.63%)
Overseas Brokerage: $58,067 (5.37%)
401(k): $54,184 (3.22%)
IRA: $78,655 (0.9%)
Roth IRA: $23,353 (-0.32%)
Total Assets: $476,085 (4.32%)

Again by end of August my cash level sees a big increase due to expense reimbursment that skewed the actual. Some areas of the stock market remain strong surprisingly but the tanker stocks I own continue to be a disappointment due to weak demand and over supply of ships.

This month I also received a letter from my mortgage company saying my rate will be readjusted to an even lower one of 3.25% from 3.625%. I'm debating whether I should pay down more principle because even 3.25% is still higher than the average divident let alone bank interest rate. I still have 2 weeks to make up my mind.

Posted in Uncategorized | 4 Comments »

4 Responses to “August 2010 - With an adjusted rate of 3.25% should I pay down more principle?”

  1. Broken Arrow Says:
    September 17th, 2010 at 08:05 pm 1284753902
    1284753902

    Nice, enviable numbers on the asset side there. Congrats. Smile

    Well, in a vacuum, the lower the mortgage interest rate, the less of a concern it is to pay off the principle.

    But then, is there a reason why you have a relative high cash savings? Do you live in a high cost of living area? What is the interest rate on that? What is your mortgage balance anyways?

    Either way, it's a nice problem to have. Smile

  2. Single Guy Says:
    September 18th, 2010 at 12:58 am 1284771527
    1284771527

    I agree, there are lots of information missing to make any type of rational decision. The amount of the mortgage, the various interest rates, your plans for the money, security of your job, years remaining on mortgage, itemize or take standard deduction, and on and on... With the amounts you have in your various accounts... if you don't have a definite plan, I would probably just split the difference, pay down a little extra, and save/invest some. It'll be the safest route, even if it is the least likely to maximize your outcome.

    The "splitting the difference" has been my plan for a few years now, though I unfortunately have a higher rate on my mortgage. Its worked for me, and in just over a year I should have it paid off.

  3. Easy Cloud Says:
    September 19th, 2010 at 03:01 am 1284865268
    1284865268

    @BA: I normally don't have a very high cash saving because I regularly put money into the stock market but the last financial crisis chickened me out and I've been too busy to do any research lately. I live in the deep South so the cost of living is relatively low.
    @SG: I have an ARM and it's been re-adjusting annualy for two years straight. I have less than 100k on my mortgage and I don't need the cash nor the mortgage interest for itemized deduction due to the large charity type contrubtions I make every year. My job is quite secure as well but I started to look for something new.

  4. Jerry Says:
    September 24th, 2010 at 10:39 pm 1285367980
    1285367980

    I agree, you are in a good spot right now... and no matter which option you choose it will still lead to the enviable position of having your mortgage interest rate lowered! Will you keep your payment the same afterward? That is one nice thing about living in the South is the insurance of a lower cost of living. If you could just get rid of that humidity I'd consider moving there in a heartbeat! =)
    Jerry

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