Getting rid of PMI (part 4): Hard work vs. a risky shortcut

White Cliffs of Dover

Part of a series:

So I finally learned that I had two options in order to remove Private Mortgage Insurance (PMI) from my SunTrust mortgage.

  • I could get a new appraisal on my property. If the new property value was high enough such that I had a 75% LTV, I could remove PMI (once my mortgage reached 2 years in age).
  • I could pay down the mortgage to 80% LTV based on the original purchase price and remove it right then.

Armed with that knowledge, I could make an informed decision. Here’s what I came up with and why.

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Getting rid of PMI (part 3): The I stands for “I already told you”

Part of a series:

Earlier this year, I talked about my attempt to figure out how to remove Private Mortgage Insurance (PMI) from my mortgage. PMI, you may recall, is insurance that you take out against yourself, because your low equity implies to your mortgage servicer that you are a risk for default. So when you have less than 20% equity (80% Loan To Value, or LTV), you are usually required to take out PMI.

PMI isn’t a lot of money, but, as you can probably tell, it makes me angry that I have to pay any amount at all because some company is betting against my repayment.

So since I got my mortgage, I’ve been scheming for a way to remove PMI.

This is the continuation of the story.

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6 example ways to invest your 15%

Train track junctions

Save 15% for retirement. You’ve heard it all before. And now you know how you determine how to determine which investment vehicles comprise that 15%.

But with so many different options and scenarios, it’s easy to get lost.

So here are six, real-enough examples showing common cases, and a suggested way to divide up that 15% for optimal results.

Everyone, meet Adam, Betty, Carl, Donna, Eddie, and Felicity.

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Getting to 15%: How to determine the best investment vehicles

Fire rainbow

I believe that the optimal target when saving for retirement is to put away 15% of your income. Potentially more, but certainly not less. Here’s why.

Getting to the point where you’re ready to put down 15% is hard. You don’t want to do it when you have debt, because you’d be better off putting that money toward the debt. And even afterward, 15% is a lot of money.

And then, once you’re ready, what should the 15% be comprised of? The alphabet soup of 401(k)s, IRAs and the like can make it impossible to know how to proceed.

I can help with that. In this post you’ll learn my preferred way to allocate your 15%.

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How to open a savings account with Ally

Purple flower

(Note that I don’t receive any commissions for posts like this. This is just, like, my opinion, man. Nevertheless, please read my disclosure policy.)

For the longest time, the standard for an online savings account was a bank called ING Direct. It was free, offered a high interest rate, and allowed you to create multiple sub-accounts easily.

I signed up for an account there back in 2005. ING left the US market in 2011 and sold its portfolio to Capital One (under the name “Capital One 360“), so that’s what I have now.

I have no problems with Capital One 360 (or 360 Savings as they call it now). It doesn’t need to do much; I put money in periodically, and take money out infrequently. It offers a low interest rate of 0.75%, which is much better than with most banks.

That said, I’ve been hearing people talk more and more about Ally as being as good as (or superior to) Capital One 360. If nothing else, they currently offer a slightly higher interest rate. If I were signing up for my first bucket account today, my first instinct would probably be to use Ally.

Ally logo

For those with long memories, this was originally GMAC. Remember them?

So in the spirit of exploration, I signed up. And if you’ve been thinking that the best place to put your buckets is with an online savings account, the following is a comprehensive tutorial on how to do just that.

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Affiliate mania, problem companies, and bling: Notes from the exhibition hall at FinCon 2017

Network cables

After a while, you realize that conferences tend to have a lot of the same characteristics. They tend to have:

  • Cavernous breakout rooms with uncomfortable chairs and a water pitcher by the door
  • A wheeled table with coffee and tea that shows up and disappears at odd times
  • Large plenary sessions and smaller breakout sessions
  • An exhibition hall with vendors in hastily-arranged booths
  • Swag beyond all good sense
  • Immense fear of missing out of something cool, whether it’s staying out to party or getting there early for sessions
  • Intense desire to sleep for a week afterward

At FinCon 2017, it was the exhibition hall that stood out to me, for its sheer mass and density. The conference had an attendance of around 1,500 people, and at times there seemed to be about a 1-to-1 ratio of attendees to vendors.

#FinCon17 here we go!

A post shared by Justin Bufkin (@instabufkin) on

As part of a competition to win a pass to next year’s conference (which I did not win, alas), we were instructed to talk to all of the vendors. I spent about six hours doing just this, and learned a thing or two.

(This is not meant to be a comprehensive review of FinCon. That would be beyond me at the moment. This is just some reflections on one aspect of what I saw there. #fincon17 love y’all.)

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Where to put your buckets

Red buckets

[Hi all. I’m at FinCon this week, and while I wanted to write a post about it while I’m here, it’ll have to wait until I get back. In the meantime, the show must go on!]

I’ve talked about the importance of “buckets“. These are individual savings accounts that you use for larger or on-going purchases: A car repair bucket, a pet bucket, a travel bucket, etc. These accounts allow you to pay for things that you couldn’t otherwise fit into your monthly plan.

These can be treated like “bills“, in that you pay a little into each of these accounts every month, so that when you need the money, no credit cards are needed.

Buckets are amazing for peace of mind too. Over time, as your buckets can fill up, it is such a relief to look at, say, your car repair bucket and know that you’ll have the money when inevitable need comes up.

Imagine that for multiple areas in your life, and you can see how buckets can really help with the emotional side of managing your money.

As for where you house these “buckets”, you have a few options.

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My goals for FinCon 2017

Conference attendees

It’s hard to believe, but FinCon 2017 is already here. Wasn’t it just recently that I mentioned how I had bought a ticket for the conference?

No, actually that was last December.

FinCon is a gathering for those in the financial media space. I’d say it’s “a conference for money bloggers”, and indeed it used to be known as the “Financial Bloggers Conference”, but it’s grown to be more than that now, encompassing any media entity that’s involved finance.

FinCon2017

Like most conferences, it has keynote speakers, a host of concurrent tracks, and side-events before and during the main schedule.

In short, it’s going to be a total whirlwind, overwhelming, dizzying.

But I’m prepared for this. Going to conferences is a skill, and one that can be learned over time. And I’ve been going to conferences for job-related reasons for over a decade. I believe it’s important to know what you plan to get out of a conference before you go. What are the goals?

Here are mine, written before I head off on a flight to Dallas to find out what it’s all about.

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Can you use an HSA to save for retirement?

Medical files

Last time, I talked about the health savings account (HSA), and how it offers an unprecedented triple-tax advantage: the money you contribute for qualified medical expenses is tax-free, grows tax-free, and can be withdrawn tax-free.

It’s like your own little shell company in the Cayman Islands.

This photo was taken from offshore…get it? Source

Now, the important point here is that the HSA must be used for qualified medical expenses. If you don’t use it that way, say if you raid the account to pay for a trip to the Cayman Islands, you will have to pay income taxes on the withdrawal, and most likely also a 20% penalty.

So if you took out $5,000 from your account, and had a median household income, you’d have only about $3,000 after all was said and done.

So don’t do that, obviously.

But even saying that, can you use an HSA, with all of its tax-advantaged goodness, to save for retirement?

The answer is: sort of.

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The investment hat trick: The health savings account (HSA)

Hats rodeo

When I started my new job, one of the items on my list was to sign up for an FSA (flexible spending account).

Now I’ve talked about the FSA before. An FSA is great, in that you can put money away pre-tax to be used for healthcare-related expenses, and really frustrating, because you need to predict with clairvoyance how much you’re likely to need during the upcoming year.

I’ve always had the option of using an FSA, for better or for worse. So it was with some surprise that I was told that my company doesn’t offer an FSA.

What? Why not?

The answer, as I later found out, is because I have the ability to sign up for a health savings account (HSA).

Which, as it turns out, appears to be superior in almost every way.

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