Personal Finance and the Economy

[Cheerful]

Well over the past year or so, my videos, mostly older ones (there are 12 or so public ones), have taken off, and 10 days ago I hit the higher threshold to make money on YouTube with watch hours and subscribers. The trajectory is continuing upwards, so even if I don't make any new videos (which I actually will do), I am on pace to make like at least 5K+ a year.

Wow, that's great, enjoy that revenue!

[zuzu_]

Well over the past year or so, my videos, mostly older ones (there are 12 or so public ones), have taken off, and 10 days ago I hit the higher threshold to make money on YouTube with watch hours and subscribers. The trajectory is continuing upwards, so even if I don't make any new videos (which I actually will do), I am on pace to make like at least 5K+ a year.

Wow, that's great, enjoy that revenue!

Thanks! YouTube is a pretty unstable source of income. Any tweak to the algorithm or monetization policy change and I'm screwed. Account suspensions can also happen at any time and there is no meaningful appeal process. But I will enjoy it while it lasts! I'm creating this material for my students anyways, and it takes me an extra five minutes to make a public, monetized version of the same material. Somehow the Google algorithm puts my stuff at the top of search results. It's a happy accident, but I'm sure it can be accidentally undone at any time.

[mamselle]

I wonder if the algorithm has to do with "most recently posted in, tops the listings going out"?

I'm interested in hearing more about the account setup and so on.

Not so much in monetization, but for use in replacing weekly tours that can't be done this year because, virus.

M.

[zuzu_]

I wonder if the algorithm has to do with "most recently posted in, tops the listings going out"?

I'm interested in hearing more about the account setup and so on.

Not so much in monetization, but for use in replacing weekly tours that can't be done this year because, virus.

M.

I pay for ScreenCast-O-Matic, which is one of the easiest and more intuitive softwares I've ever used. Support is excellent too, and you can connect it to your YouTube account for easy upload. I like to use YouTube for all instructional videos because it's extremely stable and plays nice with all browsers and devices.

[spork]

I think I know the answer I'll get, but just to double-check, I'll ask anyway:

I have 148 months left on a 20 year, 3.375% mortgage with a monthly PITI of $1,434. I can refinance to a 10-year, ~ 2.75% mortgage which would increase the monthly PITI to $1,700. Or I can keep things as is and just pay down the principal faster than required.

If my calculations are correct, 120 months at the existing PITI total $172,080. The 28 additional monthly payments for the remainder of the current mortgage's maturity date total $40,150. Total remaining payout is $212,230 on the existing payment schedule.

The 10-year refi would be 120 months at ~ $1,700 for a total of $204,000. So a difference in total payout between the existing mortgage and the refinance is ~ $8,000.

If I keep the current mortgage, kick in an extra $3,000 per year toward the principal, it looks like I'll achieve the same effect as a refinance. Should I keep the current mortgage?

[Vkw10]

I think I know the answer I'll get, but just to double-check, I'll ask anyway:

I have 148 months left on a 20 year, 3.375% mortgage with a monthly PITI of $1,434. I can refinance to a 10-year, ~ 2.75% mortgage which would increase the monthly PITI to $1,700. Or I can keep things as is and just pay down the principal faster than required.

If my calculations are correct, 120 months at the existing PITI total $172,080. The 28 additional monthly payments for the remainder of the current mortgage's maturity date total $40,150. Total remaining payout is $212,230 on the existing payment schedule.

The 10-year refi would be 120 months at ~ $1,700 for a total of $204,000. So a difference in total payout between the existing mortgage and the refinance is ~ $8,000.

If I keep the current mortgage, kick in an extra $3,000 per year toward the principal, it looks like I'll achieve the same effect as a refinance. Should I keep the current mortgage?

If the choice is saving $8000 by either (1) doing the paperwork required to refinance or (2) simply adjusting my monthly payment in my bill pay account, I'll take option 2. Why? First, efficiency. Refinancing requires a ton of paperwork and adjusting bill pay, so I'll skip the refi paperwork. Second, flexibility. Option two allows me to drop back to slightly lower payment easily if I have a pressing need to reduce monthly expenses.

Disclaimer: I haven't checked your math. But doing refi paperwork to cut 28 months off mortgage doesn't seem worthwhile in today's low interest rate environment.

[Ruralguy]

You can do all of the paperwork much faster than even 5-ish years ago. So, paperwork should only be a minor factor.  It might be worth calculating the exact differences, including fees.  If you have the means just to pay more and save money and time in the long run that way, then by all means, do so.

[Hegemony]

Watch out — the extra fee to do a Schedule C on TurboTax is high, and if you only have small royalties, they can easily be cancelled by the charge.

[clean]

I have 148 months left on a 20 year, 3.375% mortgage with a monthly PITI of $1,434. I can refinance to a 10-year, ~ 2.75% mortgage which would increase the monthly PITI to $1,700. Or I can keep things as is and just pay down the principal faster than required.

..

There is something wrong somewhere.

First, we do not know how much of the payment is Principal and Interest (rather than principal, interest, taxes and insurance), so the calculations are skewed.

Second, even if we use the numbers provided, simply making the payment 1700 a month will pay the loan off in almost exactly 10 years.  So why would it take 10 years at a lower rate to pay off the loan?


Math:
First step, (over)estimate the loan balance:
N 148   I 3.375/12  Pmt = -1434  FV =0   Then the payoff estimate is 173405  (which is too high as the payment includes taxes and insurance)
IF we change the payment to -1700 then the N calculates to be 120.39 MONTHS.

So how is it that you make the same payment (1700), at a lower interest rate 2.75% and pay off the note at less than one payment difference?


So, What IS the payoff of your loan TODAY?
Do you Itemize your taxes?
Can you afford the additional 264 a month?

Also, a note on a Spork math error.  By subtracting the payments, you implicitly assume that there are not payments required after the 120 month mark on the 204K payment total. However, as the taxes and insurance are NOT paid off at the 120 month mark, you will still make those payments (reducing the 8000 'savings' estimated).

Anyway, I believe that there are math errors and if you want to PM me or post the correct payoff value, I/we can provide a better math answer for your consideration.   

[spork]

Here's my mistake (my apologies): the figures above are for principal and interest only, not PITI. So right now I pay $1,434 per month PI. Re-financing to a 10-year would raise this to ~ $1,700.

[clean]

Then the numbers still dont make sense.

You owe $173405.24
(n=148  I =3.375/12  Pmt =-1434  Fv=0 solve for pv =173405

IF you change the payment to -1700 (without changing the interest rate), the loan pays off in 120.386 months

IF the interest rate drops to 2.75%, then the payment for 120 months SHOULD BE:  -1654.47


The interest rate drop from 3.375 to 2.75 would save a little less than 1080 for the first year,   How much would the refinance cost?  IF less than $2150, then you would be saving money after 2 years or so.

[spork]

The estimates I'm getting from a few different lenders are, as usual, somewhat vague, since I haven't bothered to actually apply for anything yet. In one case, point costs vary between $1,300 at 2.875% and $3,350 at 2.500%, with monthly PI payments of $1700 vs. $1670. And no one is being open about origination fees. I can afford to kick in $1,700 per month instead of the $1,434 required on the current mortgage.

[clean]

Im not sure Im understanding the numbers you are getting.

Lets run this scenario and you can decide if it is a good deal or not.

IF we agree:
1. you owe173405.24
2.  It would cost 3350 to to to a 2.5% loan for 10 years
Then
For no money out of pocket, (adding the cost of the refinance to the mortgage balance), then your payments SHOULD be:

N=120  I=2.5/12  Pv = (173405.24+3350)= 176755.24  Fv=0, then the payment should be 1666.27

IF you do this you would save just under 1430 in the first year.  So at 3350 it would take at over 2 1/3 years to recoup the cost.

(The 1430 interest savings was found by:
.03375*173405.24 = 5852.42
- .025 * 176755=       4418.88
But as you pay off the loans the interest costs go down, so the max you save is roughly 1430.  You will save less in future years as the loans are paid off)


IF you can afford a payment of 1700, then you can save the pain and aggravation of doing the paperwork and everything that goes with refinancing and the loan will pay off in just over 10 years (IF you can be disciplined enough to do this, and the bank correctly applies the payments). 


IF you can refinance for no more than the costs described above AND pay 1700 a month, then in a little more than 117  payments, you will pay off the new loan. 


Of course, this analysis assumes that you have paid off any higher interest debt, as that would be the better use of the money. 
Some will argue that it may be better to fully fund your retirement, if not doing so, than paying off the mortgage.  You will have to decide which is better.
Others will argue that you should never pay off a low rate mortgage and invest elsewhere (but that ignores the added risk, as paying off your mortgage is a risk free choice, and investing is significantly greater risk).

[spork]

I'll focus on this:

[. . . ]

IF you can afford a payment of 1700, then you can save the pain and aggravation of doing the paperwork and everything that goes with refinancing and the loan will pay off in just over 10 years (IF you can be disciplined enough to do this, and the bank correctly applies the payments). 

IF you can refinance for no more than the costs described above AND pay 1700 a month, then in a little more than 117  payments, you will pay off the new loan. 

[. . . ]

To me this sounds like six of one, half dozen of another. I'm a disciplined saver and would have no problem kicking in an extra $265 per month toward the principal of the existing mortgage ($1,700 - current $1,435 PI payment) for the next 120 months or so. (In reality what I would do is do an annual additional payment on the principal of ~ $3,200). And by not refinancing, I would still be able to pay only $1,435 monthly if I needed the money for something else.

[dismalist]

Get the Present Value of payments [w/o taxes] including interest charges in both cases. If the difference in PV is bigger than refinancing costs, it's advantageous to refinance. Otherwise, not.

The only caveat would be if the sizes of the elements in the sequence of payments mattered, but that doesn't seem to be the case here.