When I went to go open up my new checking account to get the $50 bonus for doing so, the gal behind the desk started asking me some questions about my mortgage.  Of course I knew where she was going with this.  Why else would a bank want to know more about your financial situation when you open an account with them?  They wanted to see if they could get me to refinance with them of course!

After asking me my monthly mortgage payment and the value of my home I stopped her right in her tracks with a challenge.  "Listen, ma’am.  I’d love to refinance if that’s where you’re going with this, but I’m willing to bet you can’t do it."  I know it was a risky move, but I’ve already talked to two banks who said they won’t touch me for a refinance until I get rid of my 2nd mortgage.  (over 34K, yeah right)

Photo by Josh Michtom

So throwing this challenge out there seemed to peak her interest based on her facial expression.  She wanted more info because NOW she wanted to prove me wrong.  :)  So I gave her the nice 85K/yr income, the estimated credit score in the low-mid 700s, (which is a semi-educated guess) and the fact that we’ve been on a plan to reduce debt for about six months now.  I gave her a list of all the things we’ve done to the house since we bought it to try to justify as much value as possible.  I just let her have the facts as I knew them, 2nd mortgage and all.

She looked at me and said it still might work.  I couldn’t believe it.  Of course, she would have to get a review from some people upstairs before giving me a call back on it, but I think she had genuine interest in trying.  Probably some little bonus for her or something if it did work out I’m guessing.

Regardless, I got excited over the idea that someone may actually consider taking me up on a re-fi.  Here I am early in the next week without a phone call though…even though she said she’d call regardless of what she hears from them.  It’s still possible I could get a call, but I’m not banking on it.  (neat, an unintended pun!)

I hate getting my hopes up on this kinda stuff.  Especially with the way the housing market and loan situation is right now in the economy.  If people wouldn’t touch me a year ago…why on earth would they want to right now?  (aside from the fact that my income keeps increasing and the housing market where I’m at is actually pretty stable)

Anyone else think I’m just getting false hope here?  I’m not in danger of not being able to pay my payments, and I’m pretty sure I could survive a rate hike too.  I just wouldn’t be able to make any progress when that happens.  Only 15 months left to go before that happens.  *sigh*

Photo by kalleboo

I was talking with the wife a few days ago, and the subject of performance reviews at work came up.  One criteria for her is how many store credit cards she opens for customers for the year.  This is usually the most difficult metric for her to meet, and she’s not aggressive with it at all because of our hatred for credit cards.  However, she’s already got 40 this year and she only works PART TIME. 

Why?  Because there’s just tons of people out there that still want to open up a credit card to get that measly little 10% discount!

My reaction?  I was dumbfounded.

Don’t people read the news?  People should be learning from the mistakes of the rest of us in this whole credit mess.  But NOOOOO.  They’d rather save $15 on a couple things they can’t even afford to buy in the first place!

It just never ceases to amaze me how some people just can’t wait to get their hands on another chunk of borrowed money.  The store cards are the worst.  They’ll give anyone credit.  As little as $500 for a credit limit, and they’ll toss in an automatic 25% interest rate right from the start.

It just goes to show that there’s no short supply of people wanting more credit.

I recently got an offer in the mail from Wells Fargo for a free $50 bonus for opening a checking account with them.  Normally, I don’t even read all the ads I get in my mailbox because there’s so much fine print that it’s hardly worth the effort to follow through with any of them.  This one, however just hit me at the right time.  I’m fed up with my current local bank and was just looking for an excuse to switch.

Account Review

Photo by thinkpanama

I have a number of accounts with USAA Federal Savings Bank.  This is my primary bank that I’ve used for just about everything from insurance to credit cards since I was in college.  With a military requirement to get membership, I’ve just yet to see a comparison in quality of service and value combined.  I use this for direct deposit for our jobs.  This bank is based out of Texas though, with no local branches.

I have a secondary account with USAA that I use for all web income and PayPal transactions.  I keep this account pretty low for the most part, and it’s the only account I’ll hook up to any outside organizations.  I never let any company have direct ties to my primary checking account because I want to be in complete control of my money.

I also have a local bank account wherever I live as well.  This account I use to hold my emergency fund, and I cash/deposit checks here as well.  I can transfer whatever balance I have over my $2000 emergency fund to my USAA account that I use to pay bills via the bank website very easily.

Then I have the ING account, which I primarily opened for the $25 bonus.  Though I’ll also start using it for saving toward big-ticket items once I have my debts lowered.

Any other accounts I have will be short term at best.  I’ve closed all of my unused accounts to simplify my life.

So, here’s my bank accounts:

1. USAA - Primary Checking:  Both jobs direct deposits, used to pay bills
2. USAA - Secondary Checking:  Web income sources linked here, PayPal, etc.
3. Local account - Checking:  Keep emergency fund here, cash checks, etc.
4. ING account - Savings:  Free bonus, referral income, sub-accounts for saving toward goals.

Why I’m Fed Up With My Current Local Account

Fees.

I’m sick to death of the little $1/month fee for just using a check card.  I hate the fact that if I go below $0 for a day, the "overdraft protection" system they have still charges me $25 for every single transaction that happens during that day no matter the amount.  (so if I write a $100 check, and have four $1 debits for whatever reason in a single day, when my account balance is $90…they’ll take the $100 first, triggering a $25 charge followed by four MORE $25 charges for the little dollar transactions.

Photo by Double Down

I have to fight them tooth and nail to take the charges off when this happens even though my deposit was SUPPOSED to be there already.  (They keep pending deposits a number of days before they let you actually use the funds.)  I get them to take off the monthly check card fees, but every year they start SHOWING BACK UP!

Enough already!  *pulls hair*

The Wells Fargo Deal

The deal is pretty basic.  If I open an account with at least $100, I’ll get $50 added to my account after 30-45 days.  It’s only for a basic checking account, and it can’t be used for any existing accounts.  Only one per household…and that’s the gist of it.

No monthly/annual fees.  There’s Wells Fargo ATMs EVERYWHERE in this country that I know of.  I don’t plan on using this for much more than cashing checks and housing my emergency fund anyhow.  So why not?

The deal is only good until April 15th, so I’m gonna just do it this week.  Once that’s done I’ll transition all of my money over to the new account and finally be done with the local bank.

I’m ready for the frustrations to end!

Anyone else have the urge to move accounts?  What put you over the edge and made you want to switch?

I took a look at my ING Direct Orange saving account again today and I got some good news and bad news.  (Granted, it was all expected.)  First, I got my original $250 back in just 16 days after opening the account and depositing it.  Secondly, the interest rate was changed to 2.960% (3.00% APY) the same day.

Opening the Account

As for the $250, well, that’s the final step in the process of opening the account, depositing my $250 to get the bonus, and then transferring it back as soon as possible to leave only the bonus money actually deposited in the account.  (I also documented my experience opening the account in my post a couple weeks ago: Finally Opened an ING Account.)  As you can see, I only went without the money for 16 days, which really isn’t that bad at all.  From beginning to end of the process I was done in about 2 1/2 weeks total, and in the mean time I earned $0.34 in interest.

All in all, opening the ING account was painless and I look forward to using the account.

Interest Increase

You can see in the image that the interest rates were increased yesterday from 3.057% to 2.960% for a change in APY from 3.1% to 3.0%…a difference of 0.1%.  This isn’t anything to complain about considering the substantial rate cuts yesterday from the Fed.  I wouldn’t be surprised if there were more cuts soon even if they’re just small ones.

Now, I’m not entirely interested in the interest rate at this point because I don’t have a whole lot of money in the account.  There were two main purposes for this account:

1. To get the $25 bonus & $10 bonuses from anyone else wanting to open one using me as a referral.
2. To have a central location to deposit and organize money (using the sub-accounts) when saving for different items.

The second purpose is really something we’ll start doing once we have our debts down a little further, because until then we’re concentrating more on debt reduction than on savings.  But this account will be great when we get around to it.

So overall I’m happy with the ING account experience.  They lived up to their part of the bargain and I’ve got my bonus money.  If you don’t already have accounts there’s a list of referrals in my ING Account Referrals resource page listed on the sidebar.  Feel free to use one.

What’s everyone else’s experience with ING been like?  Anyone have issues with getting their bonuses or pulling their initial deposit back out after a couple of weeks?

Though it’s a very busy week for me, I ran across a couple of bloggers posting their "epiphany" moments in response to an invitation from GatherLittleByLittle to do so.  I just had to take a few minutes to share mine while I’m going through all my bills and budget today.  Though I don’t find it very glamorous, it is sort of ironic.

I Had It All Figured Out

Photo by Fighting Tiger

A couple of years ago, I was financially invincible.  Nothing could stop me from being able to provide for my family, enjoy eating out all the time, go on vacations, and continually upgrade my list of toys and gadgets.  I was making over $70K/year, had a nice house, and a stack of debt.  Everybody did though, it’s just how things were, right?

Well, in my glorious plan to start working my debt without actually WORKING my debt…I suckered myself into a sub-prime loan for 115% of the value of my home.  (Though it’s probably closer to 120% of the market value now.)  This allowed me to consolidate almost all my credit cards into one payment with an average interest rate well below my then 18% average.  The plan was to pay down the 2nd mortgage before the 3-year term was up, then refinance again.  With appreciation on the house going up and me paying down, I could probably do it two years, right?

This plan had a ton of risk…but I was invincible!

Enlightenment Begins

I was working late a few nights a week during a really big project, and I started driving home when this financial guy, Dave Ramsey, was explaining to people how to best approach their financial issues to get out of debt.  I really started liking the guy and agreed that just about everything he was saying had potential to help me really change my life.  I started talking about some of his principles so much, that my wife got me his book The Total Money Makeover (aff) for my Birthday.

I don’t remember the last time I devoured a book so quickly.  But, something in the book contradicted the plan that I was currently on.  He didn’t seem to like the idea of consolidating loans, and he certainly didn’t like the idea of borrowing more against your home than you own.

Oh well, I can still manage.  My plan wasn’t that different after a few tweaks.

The Dreaded Realization Approaches

I was in my car one evening, when I heard Dave going on about something he seemed REALLY passionate about.  Whoa, was he livid.  However, it really hit me hard when I heard what he was ranting about.  Sub-prime Loans.  Um, ouch.  I’ve got one of those…

Well crap.  Everything he said really made sense.  I was totally putting my entire family at risk.  I pulled a STOOPID move doing that consolidation.  My problem wasn’t my debt, it was my spending.  I’ll just go down to the bank this week and get on a plan to get rid of all this and get back on track.

The Epiphany Moment

So I’m in the bank talking to the VP that did my original loan when I moved to my city a few years ago.  We’re talking and I’m spewing out the whole Dave Ramsey enlightenment mess with plans to get back on track with a refinance ASAP.  She’s on board and excited to help me out.  We talk income, credit checks…no problems there.  I don’t have a great credit score, but it’s not bad alongside my income.

Then she asks me how I plan to pay off the 2nd mortgage.  (The $35K that’s borrowed above and beyond the value of the home.)  Umm…I thought that’s what I was sitting in her office for.

"Do you have any other assets worth this amount?"

"No."

"What are your vehicles worth?"

"Hmm, maybe $4-5000 combined."

"Do you have a 401K savings you could borrow from?"

"Maybe a couple thousand."

"Sir, I’m afraid I can’t help you until you can pay that off…or your home value absorbs it."

Photo by carpolena

Oh…CRAP.

So much for my glorious invincible plan.  I was screwed.  It was time to clean up my act, get on a plan, and never put myself in a situation like this ever again.

I can’t emphasize enough how horrible it felt to be in there asking this lady to help me get out of my problem…and get rejected.  At that moment, both of us in that room knew exactly what I was up against.

In Retrospect

So, here I am about a year later.  I’ve got just under two years to clean up this mess before my ARM rates can increase, and I’ve made very little progress actually paying down the mortgage.  We are, however, much more aware of our situation and striving to make progress toward cleaning things up.

I remember my epiphany moment just as clear as if it were yesterday, and I actually think about it all the time.  I DISPISE remembering that moment, but it keeps me going every time I think about how much I gotta get out of debt.

When was your financial epiphany moment?  Share it, post it, link up to GLBL and join in the conversation!

Photo by charlesimages

I read about an issue that Paid Twice noticed with people understanding how the concept of snowflaking can be applied to many different situations.  I won’t go into the definition of snowflaking more, but I’d like to share a couple of analogies I made immediately upon hearing the term for the first time in the last few months to help shed some light on how the concept can be used and applied to something other than reducing debt.

Sometimes people need examples to fully understand things, so here’s a few analogies that I had made awhile ago:

1. Snowflaking is just like saving money the way Grandma used to do it.  At the end of every day/week, whatever was left went into the jar in the kitchen.  Over time, the jar would fill up full of money and the kids would all get to help count it so we could list all the things it could be used for.

2.  It also reminded me a lot of the concept of growing multiple income streams.  No matter how small the trickle is, if you gather up enough of them you won’t need to rely solely and entirely on the one river.  Just the thought of being able to replace an entire income with small streams reminded me of the comparison between snowballing and snowflaking.  Snowflaking the way I understood it is to be done in conjunction with a major debt-reduction effort such as snowballing.  You wouldn’t want to quit your job before you had enough coming in from the other streams now would you?  Same concept here.

3.  Dare I say, losing weight is a lot like debt snowflaking?  I know many of us would just love to lose that extra 30-40 pounds tomorrow night.  However it’s a bit more complicated than that.  And not everyone can dive right into a plan that takes full-time 80-hr/week training and dieting while still living everyday lives.  So if we just concentrate on losing what we can every single day…focus every little extra moment to burn a few calories here and there…over time it’ll add up to something significant!

See the pattern here yet?  It’s almost like a theme of persistence and dedication to even the smallest gains can make an overall significant difference.  That’s really what I got out of the term "snowflaking" the first time I heard it.  Hopefully those analogies have helped you understand that it’s not just a debt-reduction concept as well.  It’s a strategy for anything that requires time and dedication with just little bits and pieces at a time.