The Frugal Life Newsletter The Frugal Life December 17th, 2001 129th issue o The Frugal Life* (TFL) is published every Monday by, Keren Wells, publisher. TFL is intended for subscribers only. To subscribe, unsubscribe, or, change your subscriber data, see the instructions at the very end of the newsletter. To view the HTML version of this newsletter please go to: https://www.thefrugallife.com/current.html + CONTENTS: 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 Christ. Blessings, Keren Wells editor 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 can’t simplify things. We’ll look at a method that you can use to compare any two loans. 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 new 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 we’ll 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 this 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. Again we’ll take the annual rate (6.25%) and divide by 12 to get the monthly rate (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 savings 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 a 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 good 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 family. ________ 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 round 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 suggestions?? 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: https://www.thefrugallife.com/stiff_material.htm 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: https://www.thefrugallife.com/nicotine.htm 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: https://www.thefrugallife.com/washing_machine.htm ~~~~~~~~ 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? www.souprecipe.com 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 ideas. TFL publishes readers name with their suggestions, tips, and ideas unless a reader requests otherwise at the time of the submission.