Save money on long-term loans-a free audiobook excerpt!Like what you hear? Help us out by writing a review at iTunes. Questions go to money@qdnow.com. Thank you!
Money Girl
136 MG Reduce Your Long-Term Debt
Hey, Fidelity. How can I remember to invest every month? With the Fidelity app, you can choose a schedule and set up recurring investments in stocks and ETFs. Oh, that sounds easier than I thought. You got this. Yeah, I do. Now, where did I put my keys? You will find them. Where you left them. Investing involves risk, including risk of loss. Fidelity brokerage services LLC member NYSE SIPC. H5N1 bird flu is spreading in poultry and cows. It's rare in people, but bird flu can make you sick. If you work with poultry, dairy cows, wild animals, or with raw, unpasteurized milk, wear protective gear like coveralls, NIOSH-approved respirators, and eye protection, and wash your hands often. If you start feeling sick, seek medical care and tell them you work with animals. Learn how to reduce your risk at CDC.gov/birdflu, a message from CDC. Hello, and welcome back to Money Girls, quick and dirty tips for a richer life. I'm Laura Adams. Last week, I mentioned that my new audiobook Money Girls 10 Steps to a debt-free life recently went on sale. Since I often get questions from listeners about how to get out of debt, I'll release another free excerpt from the audiobook for this week's show. It's from the step that deals with managing long-term debt. I hope you enjoy it. For more tips on getting out of debt, including how to reduce short-term debt, such as credit cards, get your very own download of Money Girls 10 Steps to a debt-free life at audible.com or in the iTunes Store. In the context of personal finance, long-term debts or obligations you've made that are due to be repaid more than five years or so into the future. Having long-term debt is generally thought of as less dangerous than having short-term debt. So once you've confronted your top priority short-term debts, you're in a position to deal with the less dangerous ones, the long-term debt. Long-term debts, such as mortgages and student loans, are as common today as blue jeans. That's because even the average price of homes and the cost of a basic college education are out of reach for most. These high-ticket items become affordable only when the price is stretched out over many years. If the principal amount and interest rate of long-term loans are reasonable, then the monthly payment can remain manageable for most people with steady incomes. But as we know, many folks got swept up in the mortgage craze of the early and mid-2000s and borrowed too much money. They actually didn't earn enough to justify such high loans, some with wildly fluctuating adjustable interest rates. In combination with the recessions, job losses, declining home sales, and the resulting rock-bottom home prices, many are now upside down or underwater on their mortgages. Those are terms taken from the auto industry that mean you actually owe more than the asset is worth. Whether you're in this predicament or not, it's a good idea to take a look at all your mortgage loan options. If you have a mortgage general like most people, it's likely that you won't pay it off until you reach old age or perhaps stumble on a winning lottery ticket. So it's smart to reduce the amount of interest you'll pay over the life of your long-term loans. Your job in reducing long-term debt is to consider all the alternatives for paying it down. Sometimes we get fooled into thinking that small changes in interest rates aren't worth the hassle of doing a refinance or a loan consolidation. Here's an example to help you see how small changes in interest rates can make a huge difference over the life of a long-term loan. Let's say you bought a $200,000 house with a 5% down payment. That means you put $10,000 down and mortgage the remaining $190,000. If your loan is to be repaid over 30 years at a 6.75% fixed rate of interest, you'll pay a whopping $253,641 just in interest. That doesn't even include the $190,000 in principle you have to repay. If interest rates for 30-year fixed rate mortgages go down to 6% from your current rate of 6.75%, you may mistakenly think that the 0.75% difference isn't worth the hassle. Let's see. If you refinanced the loan for 30 years at the new interest rate of 6%, by comparison you'd pay $220,092 in interest. That's a savings of $33,549 in interest over the life of a 30-year loan. I'd say that's well worth the hassle, though. The refi would reduce your monthly payment from $12.32 to $11.39. Now you'd have just about $100 extra each month to pay down short-term debt. Be aware that there are closing costs and fees for refinancing a loan, you must weigh those costs against the potential long-term interest savings you'd enjoy. There's a great refinance calculator at DinkyTown.com that can help you know how long it would take to break even on the cost of doing a mortgage refinance. I'll put links to the refinance calculator and to a couple new government programs that you may want to consider at moneygirl.quickanddirtytips.com. Good taste is easy to spot, but hard to pin down. You know it when you see it, and in today's culture there's no greater signifier of taste than the car you drive. You want something sophisticated but not stodgy. Daring, yet classic. Approachable, but with an air of opulence. It may sound like a rare find, because it is. And it perfectly describes the Range Rover Evoke. Drive a statement piece with pure presence. The Evoke is charisma in motion. This luxury SUV is artfully crafted and designed to stand out, and the reductive exterior is an elegant expression of Range Rover DNA. With clean lines, the minimalist design speaks for itself. The chiseled tail lights give it a sense of motion. Even at standstill, you'll find quality materials and solid craftsmanship at every turn. And you can curate your interior with a variety of distinct themes and trim finishes. It's an elevated drive for elevated lives. Explore the Range Rover Evoke at LandRoverUSA.com. September is a great month for planning. We start thinking about the rest of the year, whether it's back to school, big year-end work projects, holiday plans or travel, planning ahead is crucial in life, especially when it comes to what happens when you're gone. Getting life insurance may sound daunting, but PolicyGenius makes the process a breeze. With PolicyGenius, you can find insurance policies that start at just $292 a year for a million dollars of coverage. Some options offer same-day approval and avoid unnecessary medical exams. PolicyGenius' technology lets you compare quotes from America's top insurers in just a few clicks to find your lowest price. It's the country's leading online insurance marketplace. And if you ever need help or guidance, they have an expert licensed support team to answer your questions, handle all the paperwork, and advocate for you throughout the process. It's never too late to plan ahead. Go to PolicyGenius.com or click the link in the description to get your free life insurance quotes and see how much you can save. That's PolicyGenius.com. H5N1 bird flu is spreading in poultry and cows. It's rare in people, but bird flu can make you sick. If you work with poultry, dairy cows, wild animals, or with raw, unpasteurized milk, wear protective gear like coveralls, NIOSH-approved respirators, and eye protection. And wash your hands often. If you start feeling sick, seek medical care and tell them you work with animals. Learn how to reduce your risk at cdc.gov/birdflu, a message from CDC. However, before you decide to embark on a mortgage refinance, I highly recommend that you approach your current lender about doing a loan modification. A modification is basically a refinance that's both easy and free. The lender pays all fees to process the paperwork. If your income has been substantially reduced, or if you don't have funds available to do a typical refinance, you may be a perfect candidate for a modification. The lender will ask you to submit your income and expenses on an application. They review your information to determine if the loan payment is too high for your current income. If so, the lender adjusts the interest rate down, extends the term of your loan, or does both. If you don't qualify for a modification and have anything other than a conventional 15 or 30-year fixed rate mortgage, it's in your best interest to contact a couple different lenders about your options. Everyone's situation is different, and the loan market is always changing. A good lender or mortgage broker should be able to make some suggestions for your circumstances. You can do some preliminary research at one of my favorite websites, Bankrate.com. In the Money Girl section of quickanddirtytips.com, you can find my Twitter link, email address, voicemail number, podcast widget, show transcripts, and more. If you or someone you know needs help getting out of debt, remember that Money Girl's 10 Steps to a Debt-Free Life is now on sale at audible.com and in the iTunes Store. I'm glad you're listening. Cha-ching! That's all for now. Courtesy of Money Girl, your guide to our richer life. H5N1 Bird Flu is spreading in some animals. If you work with poultry, dairy cows, wild animals, or with raw, unpasteurized milk, wear protective gear, and take precautions, cdc.gov/birdflu. A message from CDC. Nobody does selling better than Shopify, home of the number one checkout on the planet. 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