The Small Scale of Huge Decisions

Deciding whether to save between $200 and 500 per month on our mortgage could have long-reaching ramifications.

Good problems. Before I get into the discussion, I want to acknowledge that this is a good problem to have. We are able to refinance our house. We already have a good rate and have the opportunity to get a better rate. For the people who are "under water" in their house, I cannot stress enough how much that must suck and the crappy decsions you have to face.

In this decision making process, I decided to ask three different brokers about my situation.

The first person I asked, Broker A, has been my mortgage broker for several years. He refinanced our condo and did the lending work for our house including one refinance. What I didn't like was that, upon my inquiring into refinancing this time, there was no discussion initiated into what our current situation was, what our future held. I felt very much like a commission. Hindsight suggested that he might not have made all of the right moves in the past for us, so I decided to talk to two others to get some perspective.

Broker B I found by way of his radio show. I decided to email him on a Saturday afternoon. He called me from home almost immediately and we talked for around half an hour. I suppose I set him up to ask a lot of questions because I came from a disappointing conversation with another broker. Any salesperson will tell you that the best customer is one who had a bad experience elsewhere. At any rate, he quickly gave me several scenarios based on the different ways our life could lead. I was very happy with his honest, creative approach.

Broker C was a personal reference. He wasn't as responsive nor as creative. However, he did go the extra mile in having a friend do an unofficial appraisal of our house to see whether or not we would qualify for certain rates. That saved us a lot of time. Else, he was very friendly and also ran some scenarios to demonstrate our potential monthly payments.

It felt really good to talk to several people. What none of them could do was tell us what was right for us. 30 year fixed? 7 year ARM? 5 year ARM?

But, wait, you say, what's with all of the uncertainty?

Most of you probably know that a conventional 30-year fixed mortgage is the best way to go for people planning on staying in their houses indefinitely. Therefore, you can guess that we were not certain that we would stay in our house permanantly. Why not?

We live in the City of Chicago. We bought into the school district and for the proximity to Wife's work. We got a lot more than that. Our city block of neighborhood is on a short, one-way street. On it, there are 27 kids under age ten. The families have become good friends. We are within one of the best elementary school districts in chicago. Wife's commute is fifteen minutes in the morning and twenty-five to thirty minutes at the height of traffic. Shopping and dining opportunities abound.

On the other hand are the suburbs. The legend of those blissfully safe communitites whose grand schools are the source of great migration lure many in our situation. More house for your money. Your own yard. A sense of community. A more homogenous environment. (Okay, the neighborhood I'm in isn't exactly a wealth of diversity.)

The bulk of our extended family lives in the suburbs of Chicago. A number of our "old" friends have been moving that way and it seems likely that more will follow. It's also inevitable that our neighborhood will change over time. Someone will change jobs, want a new house, or have had other plans all along.

So now Wife and I have to make a major financial decision based on an uncertain future. If we do an ARM and decide to refinance later, what will the rates be? Will it be worth it in the long run? What is the long run? What are our other financial goals and how will this decision affect those?

Again, these are good problems to have. Wife has a good job and is important to her company. We have terrfiic credit. We have some savings for a safety net as well as retirement.

On the other hand, like pretty much every American homeowner, our house is less valuable than when we purchased it four-and-a-half years ago. We have illusions of grand remodeling that we can't possibly afford anytime in the immediate future. By choosing the lowest rate possible, we can pay down our total long-term debt faster within the fixed portion of the contract. What happens when we decide that we want to continue living in our home? What will the interest rates be at that time? I did a worst-case-scenario and it didn't look pretty. With such doubt, going with the most stable investment seems the smart choice.

Sometimes the smart choices are the hardest ones to make.

Scheduling Freedom

In many ways, I feel like Wife and I have our family on cruise control. Things are pretty stable around the house. Here are some of the contributing factors.

Wife has been finding recipes and creating dinner menus for the week.
I have stayed on top of laundry.
Cleaning the house and maintaining some level of organization has been consistent.
We have maintained our calendar so that we are generally aware of events coming sooner and later.

There are many people who do not like to live life by a schedule. They feel that the schedule rules their lives and leaves no room for the unexpected.

I could not disagree more. Having lived both sides of the coin, I can say that I have more freedom now that I keep a tight schedule. Sounds like a paradox?

When I am keeping my schedule, there are fewer times where I am wondering what I'm supposed to be doing. In effect, my time is used more efficiently. Things are being done in the order that will allow things to be done when needed rather than spending time on the wrong things, only to get hit over the head with an insurmountable number of tasks later.

One example is that of Wife creating a dinner menu. When she does so on Sunday nights (sometimes even earlier,) I can make a shopping list Sunday night or Monday morning and do all of the shopping then for the week. Now that I have all of the ingredients for all of our meals (except things like fish and other items I buy the day-of) I do not have to spend that time later in the week or running to the store in the eleventh hour.

Wife's laundry is a pain in the ass, as I've stated in the past. There are so many items that require special processes that it takes planning to make sure these items are done right the first time. Else, I'm doing a ton of ironing (or a stack of wrinkled clothes accumulates waiting for my ironing motivation to to build.) I have a better sense of when the washer needs to be started so that I can be there to separate the line dry or dry flat items from the items that need to be put into the dryer until damp and then hung or laid flat. These items cannot wait in the washer or dryer for even a moment or they will be wrinkled. With a bit of planning, I can work it out so that I can do many other things in the meantime.

Keeping the house clean has been great and easier than I thought. One thing that helped: put more toys in the basement. We recently had a shelving and storage unit installed in our basement. Having small toys in the upstairs living room is unnecessary. The only things still kept there are dress up outfits and some action figures. Everything else is in bins that are kept out of reach unless adult supervision is available.

Maintaining kitchen cleanliness has proven more elusive. I have done a much better job of cleaning as I cook (so that the kitchen isn't a total disaster,) but post-meal cleaning has not worked itself into my routine consistently. The transition from meal to the next activity to timed too close together. The best thing I have done is to consistently run the dishwasher at night and empty it while making breakfast in the morning. Being able to put dirty dishes directly into the dishwasher over the course of the day improves efficiency.

With JD in so many extracurriculars, in particular dealing with speech and occupational differences, we have many appointments consistently throughout the week. Without a tightly run schedule, we would spend a lot of money on eating out, laundry service, and cleaning service. I only dry clean items that are dry-clean-only and have maid service bi-weekly to do deep cleaning.

When I do take the time to plan my days, I find that it gives me freedom to do fun things. I know when we have time to go to the park and when we have time for playdates. I have time to hit golf balls and surf the deal websites for wish list items. I have more time to maintain our investments and to consider home improvement projects. I have time to play guitar and to make meals that take 90 minutes to cook. By having a well-established calendar (thanks, Google calendar and my Android-based Motorola Droid), I am able to think about my day and how to make the most of my time. And, in the end. make the most out of life.

Should "Banks" "forgive" student loans of the deceased?

Here's an email that I received from William Winters at Change.org:

Marc -

A family tragedy. In 2004, Ryan Bryski's younger brother, Christopher, went into a coma following a traumatic accident. The coma stretched on for two years. Christopher passed away in 2006, when he was just 23 years old.

Heartless creditors. Even though Christopher has been dead for six years, Key Bank is still trying to collect on $50,000 of his student loans -- Christopher's dad has even had to come out of retirement just to make the monthly payments. Nearly every other major lender (Sallie Mae, Wells Fargo, Citi, etc.) works to forgive the debts of students who pass away. But Key Bank refuses to follow suit with the Bryski family.

You can help. Christopher's brother, Ryan, started a petition on Change.org asking Key Bank to forgive Christopher's debt. Ryan believes that shining a public spotlight on Key Bank's heartless behavior will force them to follow the lead of other major lenders and forgive the debts of students who pass away.

Click here to sign Ryan's petition asking Key Bank to forgive Christopher's debts.

Thanks,

- William and the Change.org team

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Here's a lot more information about Ryan's campaign, in his own words:

On June 17, 2004, my brother Christopher Bryski sustained a severe traumatic brain injury in a tragic accident. He remained in a persistent vegetative state for two years before passing away on July 16, 2006. That's when the calls began.

You see, our dad cosigned Christopher's private student loans with Key Bank. When Christopher died, Key Bank came after my dad to get their money back. Our dad has had to come out of retirement to make the monthly payments. When Christopher died, my family didn't just lose a loved one -- we inherited debt for an education that will never be used.

Key Bank's actions are dramatically out of step with the status quo. The federal government and even large private student lenders like Sallie Mae and Wells Fargo all forgive student loans once the borrower dies. But over the years, Key Bank has ignored our calls to take this humane step.

In the years since Christopher's death, my family has tried to keep others from facing what we have. We've worked with members of Congress to pass "Christopher's Law," which would make sure student borrowers and their families know exactly what could happen if they die or become disabled, and we've started a website about our efforts to get Christopher's Law passed.

This work has been meaningful and important. But it doesn't change the fact that every month we're reminded of my brother's death in the worst way every time dad puts a check in the mail to a heartless bank. That's why I'm asking Key Bank to relieve my family of this terrible burden and discharge my brother Christopher's student loan debt.

Thank you,

Ryan Bryski and Family
U.S. Air Force Veteran

Here's my response:

Ryan should have had life insurance. The story is sad, but the lesson is not forgiveness but in proper planning for the future and taking responsibility. Neither the shareholders nor the employees of the bank nor the entire taxpayer system should have to shoulder the burden.

On a more empathetic note, it is a terrible shame that the family not only has to live with the loss of a beloved family member, but a constant reminder of his passing.

Cold? Perhaps. But debt is debt, regardless if it is student debt, credit card debt, or mortgage debt. Debt means that there was money borrowed from one party by a second party to pay a third party. Why does the bank eat the money? Why doesn't the payee have to give the money back?

And when the bank forgives the debt, it's not some faceless entity that loses the money. That means that shareholders of the bank have less profit from which they can be issued dividends. That means that hardworking bank employees have less money for salaries or that bank employees may have to lose their jobs to accommodate these losses. (Yes, on a side note, I know that recent events have banks in bad light, but don't blame bank tellers and people at those "expendable" positions take the fall. The CEO and other high-ranking, high bonus positions will not lose their jobs in this case.) And if the government steps in to pay for the debt, that means that the entire taxpayer system is paying the debt.

That is what life insurance is for - to protect in case of premature death. An insurance policy that would have covered that debt likely would have been very inexpensive.

So instead of petitioning Key Bank, take the time to teach yourselves and your kids about financial awareness and good financial habits. Teach kids to save money so that they have 3-6 months of expenses in the bank that they don't touch. Teach them to get life insurance to protect their family (wife and children or, in this case, siblings and parents).

We cannot blame the world for personal tragedies. We look inside ourselves, take the lessons learned, and move forward embracing the legacy of lives lost.

Pickers Can't Be Choosers

I had an experience recently where I ordered sandwiches for myself and for a friend but things didn't go very well. The order was placed over the phone for a carry-out order. I ordered a turkey-and-cheese and asked for it to be "plain." Then I ordered my sandwich without any special modifications.

When we arrived at our destination and opened up our order, my friend's order was wrong. Usually, the friend would pick undesired ingredients off, but this sandwich had mayonnaise which cannot be completely eliminated. The friend was angry, as the lunch was ruined.

A word to my picky friends: it is on you to get your order straight. While the anecdote is a true story, it is not unique to her nor to others I know who choose to order their food in a manner other than the way the restaurant menu dictates.

Here are a few tips to help the restaurant get your order correct every time. First, ask for the things you want in your food, not what you don't want. Second, have the order repeated back to you (that was my mistake.) Last, if you have someone else do your ordering for you, help them get the order right by asking them nicely to order the right way.

Finally, don't get bent out of shape when your order comes back wrong. People make mistakes. Nobody is out to get you. If you want it right every time, either cook for yourself, go to salad bars and buffets, or go to restaurants where your food of choice is supposed to be built-to-order.