Still Want to Re-Finance Your Mortgage? Read This Now

Everyone and their grandma seems to be talking about re-financing their mortgage these days. With interest rates still near historic lows (and many of us still suffering post-recession), what’s not to like about lowering your interest rate, monthly payment – or both? Not so fast there, cowboy. There are a few things to consider before you wander off into the re-financing sunset, so hold your horses and consider these key points first:

Housing Prices and Interest Rates Are Rising

Sure, interest rates are still about as low as we can expect. (As of June 12, notes a 4.14% rate on a 30-year fixed mortgage, for example.) But this is already about 20% higher than the 3.5% rate available just over a month ago! And all signs are pointing to a continued economic recovery, so the money’s on more of a rise in the coming months and years. Housing prices, too, are increasing, also adding to the upward pressure through a number of mechanisms  – and making it more likely that banks will offer you a loan. If you’re going to re-finance, now’s the time.

Many Adjustable-Rate Mortgages Can be Switched

As a corollary to the above, rising rates mean you might end up making higher payments soon — if you aren’t already. Locking in a fixed-rate mortgage may not sound as sexy as the prospect of ultra-low rates on an adjustable option, but again, the money’s on rates going up, not down. Plus, fixed-rate mortgages have other advantages – such as giving you the ability to budget and plan for the future more easily, since you’ll know exactly what you’ll owe on a monthly basis. As an alternative, you might be consider switching to an ARM with more favorable terms, such as a lower starting interest rate or a cap on payments.

Consider Costs and Fees

A typical re-financing bears costs and fees of about 3-6% of your outstanding principal, so for re-financing to make sense, you’d have to believe the savings will be larger than the expenses. These fees can include appraisal, application, and loan origination fees, amongst others, and they really add up. offers a mortgage refinancing savings calculator that can help answer whether re-financing will even save you money. In some cases, you’d save more money by just making additional monthly payments toward the principal, instead, so check the Fed’s resources for home owners to do your own comparison.

When You Shouldn’t Re-Finance –And an Alternative Option

There are a number of cases when you shouldn’t — or simply can’t re-finance your mortgage, including:

  • You have a pre-payment penalty on your current mortgage.
  • Your home is underwater.
  • Your credit score or over-all financial position has deteriorated since you took out your first mortgage. This makes it likely you’ll get a higher not lower interest rate, thus eating away at any potential savings.
  • You’re nearing the end of your current mortgage, as you’re making mostly principal payments now (and a new mortgage means you’d have to start paying interest from scratch).

If you fall into any of these buckets, but still want to reduce the length of your mortgage, it may be to your benefit to make extra monthly payments toward your principal. While it won’t reduce your monthly payment or interest rate, it will reduce the amount of time you pay on the mortgage — and the total amount you pay over the loan’s life, since you’ll make fewer interest payments. This is assuming, of course, that you have the cash flow to do so, but adding even an extra $50/month to your payment can reduce your total cost by thousands over the life of the loan, and reduce the number of years you’ll pay on it. In some cases, the savings can be as good or better as re-financing.

Example Five Ten Twenty Club Savings From Re-Financing:

Let’s assume you have the national average mortgage balance ($148,000), for a $165,000 mortgage taken out at the peak of the housing bubble (2006) at the then prevailing 30-year fixed loan interest rate of about 6.25%. Assuming typical re-financing fees and costs, at the new 30-year fixed mortgage rate of about 4.15%, you’d reduce your monthly payment by about $295.00 and save over $21,000 in interest over the life of the loan.

Monthly Savings: $295.00 (Or about $10/day)

1-Year Savings: $3540

30-Year Savings: $ 613,391.35 (This assumes you invested the savings each year earning 10% market returns)

That $600,000 is the magic figure many experts recommend as the minimum amount needed to retire comfortably. So, if re-financing makes sense for you, it could potentially save you enough money to fund your monthly Five Ten Twenty Club goals — and retirement! Remember, your goal at the Five Ten Twenty Club is to commit to saving $5, $10, or $20/day, and this is one simple way to do so.

Have you re-financed your mortgage – or are you thinking about it? Tell us how you’ve used your savings in our discussion forum or in the comments section below!






Budgeting: Three Big Questions for the Beginner


In many ways, budgeting is like dieting. Some people adopt an aggressive budget and stick with it (like the dieter who goes from carnivore to vegan overnight and quickly becomes a weight-loss success story), while other people adopt that same aggressive budget, but keep breaking it — like the dieter who keeps sneaking cupcakes. Other people adopt too loose a budget and never accomplish their savings goals — like the dieter who thinks that he should still be able to eat fried chicken every day. Finally, other people adopt a budget that works for them moderately and helps them save over time — just like the dieter that makes a few sensible changes to her food habits and starts exercising a little. You will need to decide what kind of budgeter you’re going to be.

That decision is largely going to be based on what you want to accomplish by budgeting and how well you understand budgeting. Here are the three big questions to help you understand these ideas.

Why do you want to budget?

First, you need to decide why you want to budget. Do you have something(s) that you’re trying to accomplish in the short-term or the long-term? Are you trying to stop going deeper into debt, pay off your debt or save? If you’re trying to save, what are you trying to save for–an emergency fund, a trip or a new child? Without having a clear sense of what you hope to achieve, reaching your goals is harder. Try to answer these questions for yourself:

  • What exactly am I budgeting for? - This will help you clarify a specific and concrete goal to focus on.
  • What am I willing to give up in order to reach my goals? – This will help you understand whether your goal is realistic. Maybe you aren’t ready to give up much, so a smaller goal might be better.
  • Is this a short- or long-term goal? Do I have both? Most of us can’t save enough for retirement in one year. On the other hand, you might be able to pay off a credit card in that time. Set realistic time horizons for your goals.

What’s your budgeting personality?

Like the dieters, budgeters come in different types. Some of us want the fast and furious approach, hoping to reach our goals in a jiffy while slashing costs left and right. Others prefer the slow-and-steady approach. But whatever your budgeting personality, it’s important to know two things:

1) Your habits – If you’ve been a big spender your whole life, hoping to cut costs dramatically all of a sudden might be too hopeful. On the other hand, if you’re generally frugal to begin with, you might be able to set more ambitious goals than you think. Make sure you understand what your habits are really like — and not just what you’d like them to be.

2) Nothing is set in stone — You can change your habits –and your budget– to meet your specific financial needs at any time. Whether you get a big raise or get laid-off, odds are your budget will need to change from time to time to reflect the changes in your life, goals and abilities. That’s where having a budget in the first place can help you adjust accordingly, since the budget will help you to already have a sense of what you earn and spend. It is okay if your budgeting personality evolves over time to reflect your changing life circumstances.

How well do you understand your income and expenses?

Just as a dieter can’t mindlessly eat what they want, a budgeter can’t successfully save without understanding their income and expenses. As with dieting and calories, you need to know how many dollars you bring in each month and how you spend them. Without accurate income and expense information, you will struggle to be successful at savings because you won’t be able to know how much you have left to spend or save. So how can you get good information?

The easiest way to get started is to sign up for a transaction and budgeting service like, which imports your transactions from your bank accounts and credit/debit cards into one place so that you know exactly how and what you’re spending your money on. A free service, Mint also groups your transactions by categories like restaurants, gasoline, shopping, groceries, etc. so that you can more easily use its budget tools to set short term and long term goals. Mint is the service that we use here at the Five Ten Twenty Club, and we cannot recommend it enough because it is very easy to see your transactions by category, your progress toward your goals, and how much money you have left to spend on each budget category.

You can also use financial software or programs like Excel to export information from your various card, loan and savings, checking and investment accounts into a consolidated statement. This is the preferable method if you’re already a budgeting pro — or if tracking every last detail is super important to you (services like are great, but don’t break down into individual items purchased on one grocery trip, for example). This level of detail isn’t necessary for everyone though, so don’t let it trip you up.

Finally, your receipts can also be tracked using apps like Expensify, ShoeBoxed or OneReceipt, which allow you to take pictures of your receipts using your smart phone; some of these apps will even pull your receipts directly from your email accounts and organize them by category or for tax purposes. This feature can help you with any other budgeting method you choose to use and is especially useful if you work for yourself or have significant deductions.

Do you make a weekly or monthly budget yourself or through a service like Mint.Com or apps like ShoeBoxed? What have been some of your victories or mistakes when budget-making? Share your experiences in our Community Forum!

The Great Grocery Coupon App Challenge

freeimage-10752841-webLike most people, one of my largest regular expenses is food, and I am convinced that I can probably save a lot of money each month if only I could just “crack the code” for how to eat more cheaply. However, I am also trying to eat healthier—a choice that seems to be considered a luxury lifestyle at the stores and restaurants in my city, Atlanta. Can I dramatically cut down on my food expenses while still eating the healthier diet that I want?

I don’t know, but I aim to try. And since this question suggests an experiment, let’s make it one.

I’ve been hearing a lot about how clever shoppers are using coupon apps on their smart phones. I consider myself a pretty tech-savvy guy, so this sounds like the perfect time to give a few a try.

I’ve done some research in apps stores and the blogosphere and a few names have risen to the top, thanks to popularity, ease of use, number of grocery stores involved, etc. But I haven’t found many reviews that I felt like I could trust myself, and I wouldn’t want to recommend any to you until I’ve really seen their quality for myself. So, over the next few months, I commit to trying the following apps:

  • CardCrunch
  • CardStar
  • The Coupon App
  • Endorse
  • Grocery IQ
  • Grocery Smarts Coupon Shopper
  • Ibotta
  • SavingStar
  • SnipSnap

As I try each of them I will post a review on their ease of use, success at saving me money and tips on how you can use each to reduce your grocery bills and increase your savings!

I’ll also be sure to tell you which ones aren’t worth your time.

Stay tuned. This should be fun… and money-smart!


Do you use any mobile apps to help you save on groceries?

What are your favorites and which would you never use again?

Share your advice and experiences in our Community Forum!

Make Extra Money Using Things You Already Own




Sometimes, the best way to manage expenses and start saving is to earn more money. Unfortunately, earning more money often means that you have to work longer hours, change jobs or get that hard-to-reach promotion.  What can you do?

Thanks to the power of the Internet, there are now a number of new ways to make extra cash… using only things that you already have. These simple techniques can help you save your daily $5, $10 or $20 to fund your Five Ten Twenty Club goals.

Here are some of our favorites:

If you own a car… you can car share.

Available across most of the USA including at airports, RelayRides helps people turn their personal cars into money-makers by renting them to strangers through an online marketplace. The San Francisco-based start-up checks the driving records of all its renters and also insures your car with $1 million in coverage whenever it’s being rented. The typical active vehicle owner on RelayRides makes about $250 each month through rentals, while some car owners make over $1,000 a month! That money is a huge help when, according to RelayRides, the average vehicle owner spends about $715 each month to own and operate his or her vehicle.

Example Five Ten Twenty Club Savings:

1 Month: $250

1 Year: $3000

35 Years: $856,000 (Assuming you invested the savings at 10% yearly average returns)

If you have a car… you can ride share

If you own a smart phone, ride sharing services can help you turn your car into a taxi and give rides to strangers nearby who announce that they are looking for a ride using their smart phones. Lyft, Sidecar and UberX are some of the big names in this web-driven personal taxi industry. Lyft advertises that drivers in their market make up to $35 an hour and get to choose their own hours; it is currently available in Boston, Chicago, Los Angeles, San Francisco and Seattle with plans to continue expanding. Sidecar says that its drivers can make over $30 an hour through their network, which operates in Austin, Boston, Chicago, New York City, Philadelphia, San Francisco and Washington DC. Other companies to look into include UberX and InstantCab.

If you have a spare parking spot… you can rent it out

If you live in a busy part of a city where parking spots are hard to find and expensive, you might be able to make money by renting out a parking space you have at your home to people that want to use the spot. ParkAtMyHouse and ParkingSpotter are two new web-based services that are helping space owners to find these renters. ParkingSpotter says that monthly parking rentals can sometimes average from $90 in Atlanta to $630 in midtown Manhattan.

Example Five Ten Twenty Club Savings:

1 Month: $90

1 Year: $1080

35 Years: $308,000 (Assuming you invested the savings at 10% yearly average returns)

If you have spare living space … you can home share.

Airbnb is an online marketplace that helps people to rent spare rooms, apartments or homes temporarily to tourists and passersby that are looking for a place to stay for a few nights. Airbnb can a great way to turn extra space into cash to help with your rent or mortgage or even pay for life-saving surgery, but be sure to check whether your housing agreement allows you to welcome paying guests.

If you have some spare time…

The power of the Internet is encouraging all sorts of new opportunities like the above businesses as part of a shift toward something called the Sharing Economy. The Sharing Economy is revolutionary because it is making it easy for people to turn their stuff—the things that we usually consider expenses—into assets that we can use to make the money that we need in order to pay for the things we own. Sometimes—and it seems increasingly often, too—these new Sharing Economy businesses are helping people like you and me to not just cover our costs but to start making real profits.

So if you have some spare time … you should invest it in learning how to Share.

Have you used any of these services? What other ways can you make money by renting out things that you already own? Share your thoughts in our Community Forum!

The $1 Million Pack of Cigarettes

cigarettes As part of the Five Ten Twenty Club’s on-going efforts to help its members understand how small daily money decisions can add up to big savings, we are highlighting how spending on simple things can block us from attaining wealth.

Smokers across the world know what it feels like to want a cigarette.. to need a cigarette. It’s one of the hardest habits to break, and while thousands of Americans quit smoking ever year, millions of others wish they could. In fact, a 2012 Gallup survey found that 88% of smokers wished they had never started smoking. After all, smoking wrecks your health, right?

It could also bust your chances at $1 million.

Let’s run the numbers with some quick back-of-the-envelope calculations. For simplicity’s sake, let’s imagine you started smoking at the common starting age of 16 and smoked until your death at around 65 years old. (The CDC says that the average life expectancy for a US man is about 75 years old and also that smokers live 10 fewer years on average than American non-smokers.)

Let’s say you also smoked a pack of day through your years of smoking. Gallup found that about 30% of smokers smoke one pack a day, and that number makes for easier math, so let’s go with it.

The gas station near my home is currently selling a standard pack of Marlboros at $3.79. For simplicity’s sake again, let’s say that this price stays constant through your years of smoking. (Actually, that price will probably go up over time, but let’s not complicate the math further.)

If you smoke a $3.79 pack of cigarettes each day for a year, you’d spend about $115 each month and $1,383 each year on cigarettes. All other things being constant, by the time you were 65 years old, you’d have spent almost $68,000 on cigarettes.

That’s a lot of money, sure, but that’s not the surprise here.

If you had instead invested that same $115 each month for the 49 years that you smoked, assuming an average of 10% per year market returns, that money would’ve grown to over…


So next time you feel the urge to smoke, ask yourself, “Who can afford that?”


What do you spend money on regularly that you wish you didn’t?

Talk about it and share your thoughts on this post in our Community Forum!