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I received a letter from my mortgage company this weekend that my interest rate has been lowered! About three years ago, I refinanced my 7 pct fixed rate mortgage for a 3/1 ARM. My initial rate when I took out the loan was 3.25 pct then moved up to 5.25 and has now dropped to 4.75 pct and will be locked in at that rate for the whole year.

Why would you want to ever pay off a mortgage like this? Think about it carefully, a 4.75 pct rate with inflation inarguably growing at a rate of at least 4 pct, you’re effectively paying 0.75 pct for a home mortgage! Add to it the fact that you can write some of the interest off on your taxes and you’re basically borrowing money for free!

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I am aware that the interest rate can shoot up but that’s all part of money management and investment strategy; You keep cash reserves to handle the swings up and profit on the swings down.

If you love personal finance and investing then I think you are beginning to realize why I have an entire category dedicated to the Fed and why I have a countdown at the corner of my blog as to when the next Federal Open Market Committee (FOMC) will be held and minutes released.   Every little thing the Fed does has a HUGE impact on your investing & money management strategy.

There is a bright side to the housing mess and the Fed’s panic: Prosperity for those that manage their money well and after all, that’s what its all about.