I am JDW out of middle-America, USA.
I have been a reader of the GRS articles for just over a year now. After hitting the forums only last week I spied the FFJournals and thought "Why not!"
I open this journal with some good news.
With the use of creditkarma dot com, which JDR brought to my attention in his articles, I took one of the advertised mortgage company's offers and applied. It has gone very well... I am about to finish the refinance process on my home. This will take me from a mortgage of 6.5 and a HELOC of more than that, part of it variable, to a fixed %4.5 mortgage.... saving me around $450 a month.
Now the bad news / lesson learned:
I made a foolish choice back in the day right after college - I rolled a couple student loans and my car loan into a 0% credit card (CC) offer. Back then, those offers were a year and half long. Now they expire after a year and I have to roll the whole mess, over 10K, over to another zero offer. This has been going on for....about a decade.
OK, I see a question here I'll have to answer: Yes, I have three credit cards with over 10 thousand dollar limits. (My credit rating is rock-solid well over 750.) Each card offers a 0% balance transfer every two to three months, with the usual 3% fee. The major thing here is that I only use these cards for the zero balance offer, and the movement of this +10K loan, that is it. I don't even know the interest rate on these cards, I never use them that way.
Also, I am saving on interest: Every time I flip the loan to a new 0% offer, I pay 3% of the loan as a fee. This is much better than letting the 0% rate expire, and getting slammed for 12% to 25% interest on over $10,000!
So, this $450 (plus the $300 I was paying into the CC debt) that I'll be saving per month will get put in to the already emergency fund. (Which is at "one month" level; it can support me for one month of no income.) If nothing happens, like a dead car or other emergency, I'll save enough to pay off the over 10K debt in about a year and a half. I'll still be paying the minimum to the CC while building the E-fund, of course.
So the obvious question:
Why not just pay back the loan as I go? At zero percent, paying off the CC as I go doesn't help me, other than the obvious. Building the emergency fund helps piece of mind. When it comes time to flip the balance to the new zero percent offer, I'll take part of the E-fund that I am comfortable with losing, and pay down the principal before moving the principal to the new zero offer, for a smaller 3% fee. This way my money stays in my pocket until the last minute. (and I earn a little interest on the side.)
I'll follow up in this thread explaining the "ever-shuffling cc balance" trick... and the math that bears out why it's worth consideration...or not.