Money Matters by Mom2KG

Posted by admin on January 28, 2009 in Mom2KG Columns

Mom2KG, our regular columnist is back, with new branding. Her columns will simply be known as Money Matters. In this month’s column, she discusses the 2008 round up and easy credit. She makes a good tip about keeping the meetings short- shorter meetings means getting to the point quicker. Hope you enjoy.

Hello readers, and a belated happy new year. As mentioned previously, I will continue to blog on family finances generally, and keep you updated on my family’s journey to financial security.

2008 Round-Up

We did a 2008 round-up last weekend. A shout-out to my husband, who sensibly insisted we keep the round-up to 30 minutes. There have been some tension building over the holidays about spending, so this allowed us time only to crunch the numbers, but avoid any disagreements. We were pleased to find that we’d done well with the mortgage, as expected, and are on track with the goal of paying it off early. The number in the savings account decreased very slightly, but we chalked this up to unplanned changes in the kitchen renovation. Everything else was on track (RESPs, contributions to my RRSP account).

We did talk a bit about a general budget for 2009. This included putting aside money for trips through early 2010, home maintenance and renovations, and increasing the mortgage payments again if possible. All in all, a happy talk and a decent end to a tense year of family money negotiations.

2009 Plans

Since the meeting, we’ve realized that the interest rates are well below what we’re paying on the mortgage. Number-crunching reveals we’d save about $15,000 if we can cancel our mortgage and renew at the lower rate! Seems a little too easy – does anyone have any experience with this? If that’s the case, why isn’t everyone doing this?

Brief Commentary on US Credit

I was in Chicago in October (loved it!) and was shopping in Macy’s. I was offered a “store card” that came complete with a 11% discount for every purchase. Wowee. Sure, I’ll have one of those. It wasn’t until I was home and got a Macy’s credit card statement that I realized this was not a “store card” in the way I’m used to thinking of it, but a credit card! I was livid.

I saw two major problems. First, I thought the whole sell and information around the deal was extremely misleading. I was given no indication that this was a credit card. I was approved immediately, for example. Not that anyone used the word “approved” – they just handed over a temporary card. (Which made sense to me. I thought I was getting some sort of general loyalty card that encouraged me to shop at Macy’s.) I’d even handed over my Visa as the form of payment, but the clerk put the purchase on the new Macy’s card.

Second, it turns out I was approved, just like that, for a $2000 credit limit. This, even though I had mentioned I was a Canadian, and was there visiting for business. Should that not have sent up a red flag? I could have charged $2000 on the card, and – knowing what I know, as a lawyer, about the efficiency of chasing someone for that amount – Macy’s would probably never have chased me for it.

I applied for a Canadian credit card several months ago. There was some paperwork – it took me about 20 minutes, plus phone calls, and a credit check. And this was through as bank I’d already been dealing with for years. I had to wait a good ten days before actually receiving the card.

Is it any wonder that Americans are kind of in a pickle about credit issues?

Anyone have any similar stories, or comments?

4 Comments on Money Matters by Mom2KG

By Vasile on January 28, 2009 at 12:04 pm

Hi!

Regarding your mortgage, the answer is “it depends” . Did you consider the penalties you have to pay? Interest Rate Differential can be really big, so the savings can be not so significant. In my case, I can still save around $1000, but this is peanuts compared to your $15000 . As of why doesn’t everybody do that, let’s guess: they don’t know since they didn’t do the math, they couldn’t be bothered, or simply they already have a really good rate (these days, lucky those with variables at prime-1%).

By Sampson on January 28, 2009 at 2:27 pm

I’ve been doing some calculations as well and will hit the lenders soon to see what rates they’ll offer and more importantly, if they are willing to pay some of the penalties.

My only question is how available credit actually is, we keep hearing of the ‘crunch’ in the media so are people with good credit actually being turned away?

By elman on January 28, 2009 at 9:04 pm

there is something wrong with this article when viewed under IE7
I am only getting the first paragraph and getting a
in IE7. It works ok on firefox

By admin on January 28, 2009 at 10:29 pm

Hi- look me look into it or re-post it. Thanks for letting me know.