Welcome To Josh's Blog O' Thoughts: February 2008

If you've been a reader of this blog for a while, you know that I've had a history of commenting on mortgage interest rates. The main reason was that I was in the midst of building a house and was watching to determine at when I should lock in my mortgage rate for the next 30 years. Well I'm happy to say that the research paid off.

Let's go back in blog history here and see what happened. I started really watching the rates about a year ago when we started doing the math to see if we could afford to build a house. At the time that I was crunching numbers with the bank (May 2007) the interest rate for a 30 year fixed mortgage at my lender was 5.625%; which I considered to be a decent rate. By the time we got ready to build, the rates had risen to 6.25% which was a substantial increase. I wondered if there was a correlation between gas prices and mortgage rates since gas prices had been steadily increasing at that time as well (doesn’t seem to be now).

By early July, I stated in a blog post:

I fully expect to interest rates to come down the second half of the year here. Actually, I've already seen a little bit of a dip.

I knew our build process wasn't supposed to be done until the end of January, 2008, so at this point I was just watching to try to identify trends. Well, interest rates DID start to come down, slowly, throughout the entire second half of 2007.

By the time January hit, I was really watching hard. I was now in the 30 day lock range and was just waiting for a good rate. One day in mid January, a 5.375% became available. I had only seen the rate this low 1 time in the past 7 month, so with 3 weeks until closing, I locked in. I was pretty happy with this rate considering it had come down from 6.25% since we started building.

However, over the next couple weeks, it would inch even a little lower. Then, 2 days before my closing, the rate at my lender took a huge dip to 4.875% (with no points and no early payment penalties)! I was beside myself. I called the bank to see if I could switch even though I'd already locked in. I was surprised to find out that for a $400 flipping fee, I could switch. The $400 would be made up in no time by the lower monthly payments. This switch also moved the closing back a week, but it didn't really matter because they still let us move in on time.

Now, I see that within that past 3-4 weeks, mortgage rates have risen drastically. They are currently 5.75% at my lender. On the day of our closing we were told that the 4.875% was only available for about 3 hours! I guess watching the rates for a year paid off. I was able to predict the drop at the end of 2007 that led me to an ideal time to lock in a rate.

Researching in this way could help you get a low rate as well.

There have been a lot of bad products invented over the years, but there has to be one product at the top of the list that can be classified as the worst product of all time. Lately, one product has been really aggravating me and I'd like to nominate it to be the worst product ever invented. While it may not be as mindlessly pointless as other products (pet rocks, etc), its widespread use puts it over the top.

The product that I'm talking about is polystyrene (more commonly known under the trademark Styrofoam.

So what is it about polystyrene that I hate?

1. Most places do not accept it for recycling. Even though polystyrene often has a recyclable number on it, many municipalities do not accept it. This means that many people are forced to send it to the dump.

2. It's big and clunky. The polystyrene that you get from packaging materials are intended to protect the contents of the package. They do this very well, but those large chunks of packaging are hard to fit in a garbage can. They can't be smashed down like packing paper. And if you do try to smash it down, it leads to reason number 3.

3. It breaks into a million tiny little pieces. If you've ever tried to break this stuff up to fit into a garbage can, you know that it doesn't break/smash cleanly. The breaking action lets loose hundreds of little tiny pieces of the stuff. This leads to issue number 4.

4. The pieces are charged with static electricity. After covering yourself and your surroundings with little pieces of loose polystyrene, you will be hard pressed to get them off. Try to throw them away and they just stick to your hand. Try to wipe them up and they stay stuck to whatever they are on. About the only good way to get rid of them is to vacuum them up which is not always practical.

5. Lastly, the main reason that this should qualify for worst product ever is because it is so widely used. It is used in packaging just about everything under the sun which means you have to deal with it a lot in your lifetime.

Well those are my reasons why polystyrene is one of the worst products ever made. Sure it has some good qualities (it floats, it protects, it insulates), but it is a huge pain the way I see it.

If you have other nominations for worst product ever, leave a comment.

This winter has been one heck of a ride. Here in the Midwest it's been one of the worst winters we've seen in years. Very cold temperatures, high winds, and lots and lots of snow and ice. You learn a lot about a person by how they drive in the snow. The way I see it, there are basically 4 types of snow drivers:


1. Those who know basically nothing about snow driving.

The tell-tale signs of this driver are excessive amounts of fish tailing, spinning tires when trying to gun it out of an intersection, sliding into an intersection with brakes locked, and of course the car in the ditch so long it's been drifted over. These drivers end up in accidents and in the ditch quite often.

2. Those who are OVERLY cautious.

You can recognize this person when they start driving 25MPH on the highway at the slightest flurry, they completely change their travel plans when snow might be in the forecast, they will follow a snowplow whenever possible, and they are often the type of person that is obsessed about snow blowing (not shoveling) their driveway and putting down ice melt.

3. People with four wheel drive (4WD).

These are the people who think that because their truck/SUV can spin one wheel in back and one wheel in front that they are automatically impervious to the perils of snow driving. Signs of this driver are a big truck/SUV barreling down the highway at 70MPH in the snow. Often there will be a sticker of Calvin urinating on another logo. Granted, 4WD DOES have its advantages, but it is not the holy grail of snow driving by any means, and it has little effect on a sheet of ice. We have a Ford Escort and a Dodge Durango (4WD) and more often than not, we have found that the Escort gets around in the snow just as good as (and sometimes better than) the Durango with 4WD on. (The Durango does better in DEEP snow because it rides higher).

4. Those who know how to drive in the snow.

These are the drivers who judge the slipperiness of the road and adjust their speed/braking/turning accordingly. These are the people who make it to work when it's a blizzard. These are the people who DON'T get in accidents. This is the type of snow driver that YOU ought to be.

Now, which type of snow driver are you?

I'm sure you've seen the massive amount of new headlines stating that the economy is headed for the hole. Well so have thousands and thousands of investors. The result is a massive flock of scares shareholders selling off all their investments because they think the stock market is going down the tubes. Well, I got news for them: YOU'RE CAUSING THE DECLINE!

By over saturating the market with sell orders, the demand for these shares diminishes and so does the selling prices. Other investors see their stocks going downward and they decided to jump ship also which only enhances the downward spiral. Smart investors (the people that get rich off of times like this) are just waiting for the right time to start snatching up all of these stocks at discounted prices. Once these big time investors start buying, the little guys will say "Hey, they know something I don't so I will follow their lead and buy also." And low and behold, demand increases and stock prices go back up. The people who made the most money were the ones who bought in at the bottom and started the upward climb.

So, to those of you who are private investors, don't dump your declining stocks just based on outlook. Don't be part of the problem. Hold on to those stocks. If it's a decent enough company the price will come back. In fact, many of you may want to pad your investments by buying some more of these companies at discounted prices. I know I will be looking heaving at this.



Disclaimer: I'm just an amateur investor and have had no formal training. Please do your own research on a company before deciding to invest wisely. I can not be held responsible if you lose money on the stock market.

Since I missed it in January, I thought I'd go ahead and post the list of the most popular posts in 2007. So here they are:

1. Is This Hunting Or Fishing? - Contains link to a video of people bow hunting for Asian Carp. Also includes some information on the problems created by this invasive species.

2. What? Worms Are Bad For The Ground? - Information about invasive species of earthworms and how they can damage forest vegetation.

3. Pay-Per-Channel Television Service - My musings on how great it would be if cable/dish providers would allow us to choose only the channels we wanted and then charge us for just those channels.

4. Are The Sun's Rays Weaker? - Questioning the ability of the sun to burn us due to the carbon-laden air. The resulting comments are very informative.

5. Chris Dodd Might As Well Give Up - I hate to say it Chris, but I was right. You lasted little longer than 1 or 2 caucuses/primaries and what do you have to show for it? A bunch of wasted time, money, and resources. You were never a contender.

Well, there you have the top 5 of 2007. Enjoy.

Well I wasn't really on vacation, but I did take the entire month of January off from blogging to take care of my affairs. Namely, moving in to our new house (expect a posting soon on some of the details). With my computer packed up in boxes for a good amount of time, I felt it was easiest to just let the blog slide for a few weeks.

Well rest assured, I am back and I do plan on posting more material very soon. Thanks to those of you who have continued to check this blog during the drought.