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What will .75% do to you?

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waffleironhead said:
Yeah, i did a refi on my other car loans early this year. My work tundra is at .9%, my second tundra is at 1.99%. Every where I look rates are rising. Toyota financial is at 1.75% but ends early july, and my other prefered lender is 2.97% right now. With this upswing, I'm going to have to do some shopping around.
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I follow the 5x rule. If I can't afford 5 of what I want to purchase, then I can't afford 1 of that item. So, if a car cost $40k. I would need to be able to purchase 5 of that same car, so $200k would have to be in my bank before i'd even think about purchasing a $40k car. It keeps my spending in check.
 
Shouldn't affect me negatively other than possibly pushing down stock growth and slowing down my plan to buy another house.

House is fixed 2.875%
Truck is fixed 2.49%
SUV is fixed 3.25%

Don't carry balances on any credit cards, which are my only variable accounts.

Hopefully the interest rate on my savings account increases a bit more. It's .90% right now and while I don't carry much in there, it would be a nice bonus.
 
No variable rate loans so no immediate difference, but it does modify and solidify some plans for me. We've been between moving to a larger place and adding onto my current house and garage -- keeping the 2.875% 30 year mortgage makes it an easier decision to stay and pay for as much of the expansion in cash as possible. I'm also looking to buy some land up north in the mountains and will want to limit financing on that and just buy in cash as well.

Wife and I have both significantly increased our savings rates, around 50% after tax / maxing out all the usual stuff. Still dollar cost averaging into VTI as well in both retirement accounts and after tax.
 
Nope. Inflation is hitting us a bit, especially on groceries. But the fed fund rate wont affect that immediately. I’m waiting a bit on putting more money into an index fund. S&P 500 has more sell ratings than hold or buy. Some bizzaro Morgan Stanley stock analyst on CNBC said the S&P was going to hit $4900 by the end of the year. I LOLed.
 
$4900 would be fine by me.


Just got a big check in the mail from a place I took a piece of equipment for sale, so that will go directly on the one loan knocking another few months off of it.
 
Mai72 said:
Saving is losing. You should only have enough money in savings to cover emergencies. The rest should be invested.
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Thanks, I hate it. I really do. We shouldn't be beholden to the fucking stock market for our retirement, and increasingly our healthcare savings. They really pulled a number on us. Look up what savings account rates were in the 60s-70s.
 
Mai72 said:
Saving is losing. You should only have enough money in savings to cover emergencies. The rest should be invested.
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I agree, but invest in what? I just purchased $20,000 worth of series I savings bonds, $10,000 for me and $10,000 for the wife. Currently paying 9.62% interest adjusted semi-annually based on inflation. Don't see that going down. If interested: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ibuy.htm

And CD rates are on the rise, if you have some money to tie up for a year or more. https://www.connexuscu.org/accounts/share-certificates/#disclosures 2.86% APY for 24 months. Catch is $5000. min., and $5. to join this CU. https://www.forbes.com/advisor/banking/cds/best-cd-rates/
Edit 6/18: I was about to take out a CD from Connexuscu but they got greedy and dropped their 2 year CD rate from 2.86% to 2.06% yesterday. WTF.
There are other banks out there with higher rates. Check Bankrate

Savings account interest rates are also rising, not much, but 0.90% APY on my Discover bank savings account is better than it was just a couple of months ago when it was 0.15%.
https://www.discover.com/online-banking/savings-account/

It's begun: Mortgage rates hit 5.78%, the biggest weekly jump since 1987
 
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waffleironhead said:
Yeah, i did a refi on my other car loans early this year. My work tundra is at .9%, my second tundra is at 1.99%. Every where I look rates are rising. Toyota financial is at 1.75% but ends early july, and my other prefered lender is 2.97% right now. With this upswing, I'm going to have to do some shopping around.
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Yes, but what APR is the gas you're buying for those Tundras? Many CCs are over 17.99%. 😱
 
No variable rate loans here. Have a fixed 30 yr mortgage and a low APR auto loan. No plans for anything else in the near future.
 
I refinanced our mortgage in April of 2021 (I think) at a rate of 1.625%.

That's the only debt I have right now but we're going to need a new car somewhat soon and I don't plan on paying for it all in cash so that's going to suck having a car payment. We haven't had a car payment in like 5-6 years.
 
2.5 % fixed on what is left of my mortgage > 25K remaining.
No outstanding bills other than living expenses Food, Gas Electricity and taxes.
 
Mortgage is fixed. Cars are paid off (and would be fixed anyway). CC companies pay me to use their cards as it should be. I expect my savings accounts will generate a bit more interest.
 
I would never have an adjustable rate mortgage. I'd rather have a fixed 15 year so I know what is coming and can plan accordingly.
 
Crap, I thought I was stylin' big time when I got my 9.X% VA mortgage in the early 80s when everybody was paying 10% or more.

Next house I bought in the early 90s was at 6 something as I recall.
 
25 year is mostly the standard here in Canada but pretty sure you can get up to 40 year. Ideally whatever term you get you want to try to make bigger payments especially at the beginning since a big chunk of the payment goes towards interest only. For a while I was doing $650 biweekly payments instead of the minimum $400 but due to inflation I had to dial that down, I'm at the minimum payment now. Also had to reduce my company ESP contribution. It's crazy making over 80k but still living pay to pay, that's just how bad inflation has gotten over the past decade or so. I did spend money on non cost of living stuff too, but that's not really the bulk of my expenses.
 
Opinion time.

What do you feel would be a fair interest rate? Banks, like all other businesses are there to make a profit, but they should be able to do so without robbing us. Is 1% on a mortgage fair to them? Is 10% on a mortgage (like many of us paid years ago) fair to us?

Is the .1% we're getting on savings fair to us? Or is 1% fair?

What would you consider a fair difference between loan and savings rates?

If they pay us 1% on savings, what should they be getting on loans? 2%? 5%?

And yeah, I know the question is simplistic and there are a number of other factors.
 
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I think the rule of thumb is it should be the same or higher than inflation. Whatever the government says inflation is, triple that number for the ACTUAL number. Set interest rate to that. Perhaps slowly over the course of a few years. Back when interest rates were double digits, stuff was also way cheaper than it is now. In the end even accounting for interest paid on a loan, houses were way cheaper, and so were cars and other big ticket items.

We need to stop normalizing credit being so cheap and easy to get, that just makes it so it's normal to use credit for everything and then companies know they can charge more because lot of people are dumb and only look at how much it will cost per month. Cars for example. It's really insane how expensive they are getting. Especially EVs, and that's suppose to (and should be) the way of the future, but at those prices they're just not accessible to most people. If loans were like 20% interest then they would have no choice but to drop prices on cars because most people are not going to be approved for a loan on such an expensive item at that rate. When car companies offer 0% financing, they're not doing it from the goodness of their heart. It's just built into the price.
 
Lost_in_the_HTTP said:
Opinion time.

What do you feel would be a fair interest rate? Banks, like all other businesses are there to make a profit, but they should be able to do so without robbing us. Is 1% on a mortgage fair to them? Is 10% on a mortgage (like many of us paid years ago) fair to us?

Is the .1% we're getting on savings fair to us? Or is 1% fair?

What would you consider a fair difference between loan and savings rates?

If they pay us 1% on savings, what should they be getting on loans? 2%? 5%?

And yeah, I know the question is simplistic and there are a number of other factors.
Click to expand...
What is fair, is what a free and open market dictates. A loan is a tradable item just like other financial items. So when the inflation is low you can get interest rates as low as 0,5% when it's high, not so much.
 
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