Happy Chinese New Year! The year of the tiger is upon us, and it was fitting for me to start the year by visiting my friend in Colorado with multiple cats. I've seen his cats grow from young kittens in 2012 to family fixtures to welcoming in a new human being into the world and living with him in 2022, and now the kittens are a little long in the tooth but still spry, welcoming me by jumping on me and trying to get my attention. Maybe they recognized me from so many trips visiting them over the years?
Ski trip in Colorado broke me out of my months-long funk of just working at home and not going anywhere (also necessitated by the Covid Omicron variant breakout making it risky to get anywhere). It's one thing to go to a new environment and breath different air, sleep in different bed, do different activities other than stare at a computer screen for at least 8-9 hours a day and intermittently typing/clicking, but also meeting with other live human beings and getting to know them, making jokes, engaging in banter, all things that I do with MJ but we're both probably a little tired of ONLY talking to each other. A great weekend can change my perspective on life, alter my lifestyle, provide great memories and great pictures, and solidify friendships that have been tested due to the pandemic and long periods of not seeing each other....They say that familiarity breeds contempt, but lack of familiarity with friends breeds neglect and growing farther apart.
Another benefit of talking it over with friends: bouncing some investment ideas off each other, especially about the homeowning process, which I am very new to. I'm ashamed I didn't think of it before, but a dinner conversation sparked discussion of paying a little extra towards principal, and if I do that enough times over the course of the loan and using big enough payments, that it could drastically shorten the lifetime of the loan/ lower the total amount of money that is paid for the life of the loan. I have thus far been sticking to the agreed-upon payment terms in the 15-year loan like a chump, not deviating from that set payment and not thinking outside the (mortgage) box, especially since all extra payments will be free from encumberances of property taxes, escrow, and interest payments. Those are all covered in the fixed monthly fee I pay; everything over and above that I pay above that goes directly to the principle of the loan, which is the sweet spot, like lean meat covered by all that grease and fatty outer layers. I am lucky in that I have a nice surplus of money to work with every month (as opposed to some homeowners who have trouble scraping up enough cash to get it together) so that money's just sitting there waiting to be used (and in fact would decrease in value if I just let it sit there).
Then again, there's a reason I got a mortgage in the first place: low interest rates. With the Federal Reserve announcing plans to raise rate up to 6 times just in 2022, it appears I locked in my mortgage interest rate at around the very low: less than 2.5% (also my credit score helped, another good reason to build up good credit by making all credit card and other payments on time all the time). That 2.5% means if I can put my money towards something that yields 2.5% or better, I should go with that investment instead of pay extra on my mortgage, since earning 2.5% return is about the save as avoiding the 2.5% interest. What, may you ask, yields, 2.5% or more? Well, dividend aristocrats on the stock market, of course. The safest investment out there is US treasury bond yields, which right now are at about 1.95%, not as high as the mortgage rate, but you get that for sure, 100% (unless the U.S. fails, or the world completely fails, in which case there are bigger problems we all face than not getting that 1.95% interest). Shares of individual companies on the stock market are much riskier and can obviously go down, making your initial investment shrink instead of return any money at all, but that's the inherent risk in stocks, and part of that risk is the stock price going significantly higher, which goes ON TOP of getting that dividend payout. Usually technology companies and growth companies don't have a high yield or any (GOOG, Amzn, and Tsla have no dividend, by AAPL, the best company in the world according to many, has a small dividend to give further reason to own the almost 3 trillion-dollar market cap company on top of all the great assets it possesses). But the companies with yields higher than 2.5% are most staple companies, without much growth (since they're paying out money to shareholders instead of investing those in future growth) like ABBV, one of my favorite pharmaceutical companies with headquarters near hometown of Chicago, IL. Every quarter (of a year) like clockwork, ABBV deposits money in my Etrade/Robinhood accounts just for owning the stock, and I of course reinvest that dividend money to benefit from the concept of compound interest, letting interest accrue on the interest and so on and so forth. It's a pretty nice feeling, one I add on to by owning other pharmaceutical companies (tend to have higher dividend payouts) like Pfe and Amgn. Then there's companies like Costco, which sometimes gives out SPECIAL dividends, a lump-sum payment to shareholders, a nice bonus under the Costco Christmas tree just for owning the stock.
So yes, I do get more excited and wordy when I talk about money, but also there are other ways to spend extra money than to put it towards the principal on the loan payment......but the worst thing in my position is to let that extra money burn a hole in my pocket and just sit there (not under the physical mattress but the proverbial mattress of my checking account, which gives zero extra value).
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