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The Frugal Life – Living Well With What You Have

The Frugal Life Newsletter

The Frugal Life
December 17th, 2001
129th issue

o The Frugal Life* (TFL) is published every
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o A Note From Keren
o Comparing a Refinance –by Gary Foreman
o Readers Needs
o Last Week’s Readers Needs
o Readers Tips
o Disclaimer
o Subscription info

A Note from Keren
This is the last newsletter of the year 2001, thank you for reading this
newsletter and for your contributions.  Please remember to enjoy and
receive the Gift of God this Christmas, grace and salvation thru Jesus

Keren Wells

p.s. Please know that the rest of the knives have been sent, you should be
getting them this week.  thanks, Keren
Comparing a Refinance
The Dollar Stretcher
By Gary Foreman

Dear Gary,
My husband and I want to refinance our mortgage and add a credit card
debt.  We owe $44,000 on our mortgage at a rate of 7 1/8% and we have 11
years left.  We want to add a credit card debt of $17,000 at a rate of
9.99%.  The best mortgage rate that I have been able to find is a 15 year
fixed at 6.25% with a fee of $1161 and no points. Would we be wise to
refinance?  Thanks. I hope you can help me with the answer or point me in
the right direction.
Lynn O.

You don’t need to be refinancing your home to ask this question. We face
the same problem with competing credit card or auto financing offers. And
many of us have a similar reaction. There’s just too many numbers to even
know where to start. So we end up with something that could be costing us
extra money every month.

Let’s break Lynn’s question down into bite sized pieces and see if we
simplify things. We’ll look at a method that you can use to compare any

First we’ll figure out what Lynn is paying in interest each month on her
current mortgage and credit card balance. Then we’ll calculate what the
loan would cost her in interest. Then we’ll compare the two and see how
long it would take to recover the fee.

Begin with the existing mortgage. Lynn has a $44,000 mortgage at 7.12%.
We’ll do a monthly comparison. If we take the annual interest rate (7.12%)
and divide it by 12 we’ll find out what the rate is each month. It works
out to 0.59%. To calculate how many dollars that equals to each month
multiply the mortgage principal amount ($44,000) by the percent interest
(.59% or .0059). It works out to $260 in interest charges.

Now for Lynn’s current credit cards. She has a balance of $17,000 and is
paying 9.99% interest. The process is the same as for the mortgage. We’re
going to take the annual interest and convert it to a monthly rate. In
case that’s 0.83%. Then we’ll multiply the balance by the rate ($17,000 x
0.0083) to get the monthly interest owed ($141).

So, between the two bills she’s paying $401 ($260 + $141) each month in
interest payments.

How would a new mortgage stack up? Well, since she wants to add the credit
card debt to the existing mortgage, the refinanced mortgage would be
$61,000 ($44,000 + $17,000).

Now that we know the principal, let’s calculate the monthly interest.
we’ll take the annual rate (6.25%) and divide by 12 to get the monthly
(0.52%). Then we’ll multiply the mortgage balance by the monthly rate
($61,000 x 0.0052) to get our monthly interest amount ($317).

Now we’re in a position to compare how much the two loans would cost. The
new rate would save her $84 each month in interest ($401 – $317).

But, as Lynn pointed out, there’s a fee of $1,161. Is it worth paying that
fee to get the monthly savings? If we divide the fee by the monthly
we’ll see that it would take nearly 14 months for Lynn to save enough to
recover the fee.

Now I’m sure that those of you who are good with math have probably found
few flaws in our method. The main problem is that all three balances will
change a little each month. So to be perfectly accurate we’d need to do a
separate calculation for each month. And then adjust our account balances
and do it all over again. And again, etc.

But that really shouldn’t be necessary. Predicting the future isn’t an
exact science. So even if our calculations were precise, the future
wouldn’t be. This method will give Lynn a pretty fair estimate. Certainly
good enough to make a decision.

There are other things to consider. Payments may be different than the
amount of interest owed. The new interest owed each month is like money
that Lynn has spent. In this case she bought some borrowed money. Her
payment would typically be the amount of new interest plus some of the
principal amount owed. She doesn’t want to confuse the two and sign up for
a payment that she can’t afford.

Also, rolling credit card debts into your home mortgage isn’t always a
idea. There can be a temptation when you see an account balance of zero.
Many people will run up the balance again. And that would defeat the
purpose of putting the credit card balance in with the mortgage.

 From this point Lynn should be able to compare the two choices and make a
reasonable decision for her family. We hope it’s a good one for her

Gary Foreman is a former Certified Financial Planner who currently edits
The Dollar Stretcher website <>  You’ll find
hundreds of free articles to stretch your day and your budget.
Readers Needs

Q.I have lost or misplaced my recipe for making apple butter using canned
applesauce. Does someone have this recipe to share? Thanks a bunch!
Barb W.

please send the answers to editor

Q.  When I burn some of my candles, the wax melts down in the middle, leaving the outside of the candle untouched.  By the time I burn the candle to the bottom, essentially half of the candle has not been used.  Is there a way to melt the remaining wax and make it into another candle?  Thanks, Holly

please send the answers to editor

Q.  I have a dryer dilemma..My clothes dryer is beginning to leave small
rust spots on all our clothes. I’ve tried the CLR rust remover and also
vinegar to clean the dryer drum but it still ruins my clothes…Any

please send the answers to editor 
Last Week’s Readers Needs
o I am wondering whether any other reader could help me with softening
‘stiff’ material.  I purchased some 65% polyester 35% cotton yesterday to
make a couple of dresses.  I was assured by the sales assistant that my
concerns over the stiffness of the material would be allayed by washing
and that it was just a ‘dressing’ that remained on the material.  I washed
both pieces with normal liquid and then a fabric conditioner and hung to
dry.  Alas there is no change.  I made one dress up and it feels like
wearing cardboard.  What can I do?  Is there a common household solution?
Thanks –Natasha
To read the answers go to:
o  What will remove smoke film from mirror glass?  I have tried
everything, nothing will cut the nicotine build up.  [Quit smoking, praise
God] Thank you,  –Betty/NC
To read the answers go to:
o Lately, whenever we run a load of clothes in the washing machine on the
cold setting, the water just trickles into the machine.  The cold water
flow from all of the other faucets is normal.  My husband has tried to
clear the line into the washing machine, but cannot find any debris.  Does
anyone out there have any ideas on what is wrong and how we can fix it
ourselves?  Thanks!
To read the answers go to:
Readers Tips

o Keren,   as parents with adult children, we
sometimes get this from our children; “Why didn’t you
get that when we were at home?”  
   Truth is it costs a lot to raise children and there
are some things parents cannot afford to get until the
children are on their own.
   But, we always whenever possible got things that
would not have to ever replace.  This is a frugality I
know my parents never learned.   It is always less
expensive to think in long term cost not the immediate
‘can I afford it now’  kind of thinking.  Whenever
possible go for endurance, even if it is a little
pricey now.  The cost of children doesn’t even come
close to the cost of teen-teenagers and young adults.  So
make sure the ‘expensive’ things will outlast their
tenure as your at-home children.

   Thank you, Michael
o When my fleece blouses and jackets start to get
matted looking I use a slicker brush for
dogs/cats to “fuzzy it up” again.  The brush
bristles are tiny little wires and I just use a
gentle picking sort of motion to lift the nap.
Can’t pull too hard when it grabs the fabric or
you’ll probably wind up with thin or bald spots.

o   I am not a Mom but I am a working wife, and I try to live frugally.
Even thou both my husband and myself work full time, we still need to
watch our funds.
 I really despise any prepared foods. They are not only expensive, but I
think bad for you, and not as good as real food. Here are a few of the
ways I avoid using the convenience foods in my kitchen. Some save money,
some save time.
1.) Instead of gravy mixes, I purchase bouillon cubes. Have them on hand
as well as flour, and you can whip up a sauce in no time.If you can add
some of the juices from the meat, all the better for flavor.Serve over
rice or pasta , or, cook your meal in the gravy,(chop veggies and meat
in bite-sized pieces) then serve over the pasta. It’s great, a basic two
pot meal!
2.) Try making your own soups and stews. They are so easy, once you have
tried it. I used to be intimidated, but really they are fast, easy and a
great way to use up veggie leftovers. Need a recipe?
or, saut� onion and celery in butter or oil in a pot. Add meat, brown,
cover with water and simmer about 30-45 minutes. Add veggies, bouillon,
and continue to simmer 10-20 minutes or until veggies are done. Thicken
with flour and cold water if desired(not necessary).The smaller you
chop your components, the quicker they cook.
3.) home baked cookies are nice, but the ingredients are very expensive
for the more popular ones. Buying the cookies which are baked in the
store(Safeway in my case) really is less expensive, in most cases.And,
not as time consuming!
Well, I hope you find these helpful. Thank you for your
website/newsletter, I look forward to it every month!
Jani, Denver, Co.

o  I wanted to comment about the article “Trouble getting Mortgage.” The
question was from a lady named Sally. She said her debts were written off
after 5 years. My Husband had credit card debt that stayed on the credit
report for 7 years. At this time there was no way to pay them off.  After
7 years it disappeared.
We had to get a vehicle and went shopping for one, not sure if we could
get one. We found our credit was actually fine then. About a year later
when Our finances were better we thought about getting a house. We found
our old credit debt back on the credit report. We were told that someone
had bought our old debt. We had no idea this could be done.  We had always
heard that bad credit cleared up after 7 yrs too. We found this not to be
true. –Robin

If you have any frugal tips, please send them to editor

+ DISCLAIMER – Information in TFL has been derived
from sources believed accurate and reliable. In no
event shall *The Frugal Life,* Keren Wells, or the
TFL staff be liable for any damages whatsoever
resulting from any action arising in connection with
the use of information herein.

TFL does not knowingly accept ads from advertisers
deemed detrimental to TFL’s readers, however,
publication of an ad in TFL does not constitute an
endorsement for such product or service.

There is no remuneration for suggestions, tips, or
ideas submitted by readers, other than occasional
prizes offered by TFL and awarded at the
sole discretion of TFL and it’s staff.

All suggestions, tips, and ideas, submitted for
publication in The Frugal Life, become the property
of The Frugal Life, notwithstanding similar rights
of the reader submitting such suggestions, tips, or

TFL publishes readers name with their suggestions,
tips, and ideas unless a reader requests otherwise
at the time of the submission.

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