June 20, 2009
While the wife spent a week in England last month, I decided to fix one of those nagging thing about the house that’s been bugging us since we moved in. The stairs to the second floor never had a hand railing. The home inspector poited out that it wasn’t up to code, but we were already making the homeowners fix a lot of other things, so we left that one off. Now, with a pregnant wife who might struggle to get up stairs at some point and a baby on the way, I figured a handrail might be a good idea.
Problem is, my house has no garage and no basement, so I have no place to do woodworking. And from what I understand you don’t want to be staining inside, as the fumes can get really bad. So this is my adventure of doing simple woodwork without the proper tools, time or space.
So, I take some rough meaurements, take note of the color of the existing wood at the top and bottom of the stairs (so I can match it) and I’m off to Home Depot. I bought 9′ of unstained hand railing (similar to this, although I don’t think my store had oak, I think mine was pine.. it’s that shape though). I only needed about 7′, but from what little I know of woodworking, always buy more than you need. From memory (not smart, should have taken a sample) I choose a stain that closely matches the existing colors in the house, and I bought some polyurethane protective coating. I also pick up a small wooden hand saw, since I didn’t have one.
Once I got home, though, I realized it’s nearly impossible to hold 9′ of wood againt a wall yourself to get exact measurements. Plus, I really needed a chalk line to get a straight line between the two points… so I conned a friend who had a chalk line into coming over and giving me a hand for 30 minutes while I market up the wall and the wood. He also told me to take back the polyurothane I bought and get a water based one instead, because it would be easier to clean up. I market up the wall so that the chalk line represented 3′ railing height. As far a I could tell, that was up to building code… if code even applies to interior stairways.
Next part was to cut the wood. It had been raining all week so I wound up just doing that inside, and vacuuming up the sawdust. This is where I made my first mistake. I had planned to make little “wall returns” at each end of the handrail. That way, the wood appears to come out of the wall and go back into it, so you can’t snag things on the end of the railing. Of course, I cut the angles wrong. Instead of making a trapezoid /___\ , I made a parallelogram /___/. Crap. Well, I could either get a new railing and start all over, or just live with it. A new railing would cost me about $30, and the whole wall return thing was making this way more complicated anyway, so I decided to just leave the railing as is and see how it came out.
Next I needed to stain, but it had been raining all week. But come the weekend, the weather report was for sunny skies all weekend. Saturday morning I set up two of our deck chairs back to back on our deck, cover them and the deck with a drop cloth, and balance the railing on the back of both chairs. They made pretty servicable sawhorses. I sanded the wood lightly, and applied one coat of stain. I was -very- surprised at how little stain it takes to coat a 7′ railing. A little goes a -very- long way. I made sure to cover everything evenly, and went over it again with a lint-free cloth to even it out. I let it dry in the sun for 4 hours, and then sanded lightly and applied another coat.
I was very worred, as the stain is sticky, and since I was outside, dust, pollen, and everything else could just fly through the air and stick to it. And because of the rain all week, time was short (Katy was coming home on sunday), so I couldn’t keep applying new coats indefinitely. Plus, I still needed the clear protective coat. But, at least the rain had stopped so I could leave it out overnight and letit dry before applying the clear coat…
..except I awoke sunday morning to the sound of pouring rain a 6am. So, not only had my railing been outside, with the stain still drying, now it was getting soaked, and would need to dry out before I could even think about applying the clear protective coat so keep it protected from things like… well…moisture.
Luckily, by 9am the rain was gone and the sun was peaking out. I was due to pick katy up at 7pm. So I moved the railing into the sunlight and let it dry out for a few hours. Then I applied the polyurethane, and waited an our or so to sand and apply the next coat. I applied two or three coats, I forget, and while the wood looked great, the clear coat is still lumpy and and grainy in spots. But by then it was 5pm, and I had to get it hung if it was going to make it before Katy got home. So I let it dry until it wasn’t too tacky to the touch anymore, and brought it in to hang.
I measured where the studs were in the wall, and measure where the first bracket should go. I then installed the first braket into the wall, and then attached the rail to that bracket. Using the railing itself and the chalk line as a guide, I was able to tell where the second bracket should be mounteded to get the right height and angle. My wall only really had two studs I could use, so I only used two brackets, but once installed, it seems very solid. Hopefully it will stay that way for a long long time, and the screws won’t work thier way out of the wood.
In the end I think it came out pretty well. It’s not as smooth as I would like, but I would attribute that to the moisture in the wood when applying the clear coat and the fact I had to do everything outside where I’m sure it picked up dust and pollen. But, now that I’ve donei t once, I’m sure the next time, it will work out much, much better.
Posted by john under General | Comments (0)
June 9, 2009
As a followup to my last post, here is the spreadsheet I use to calculate how much interest I’ve accrued based on when my payment will be applied. Remember to add in 2-3 business days from when you actually submit your payment online until it goes through.
Put your interest rate in C4. Put the amount of principal you owe after your last payment into cell C5, then put the date your last payment was applied to your account. Once entered, the table below will calculate how much interest has accrued on each date for the next month and half.
For example: Say you have a loan at 6.55% interest, you statement comes on the 26th, and due date is the following 13th, and your minimum payment is $400. Say your last payment was made on 5/26, it gets applied on 5/28, and that payment lowers your principal to $50,200.
Now you’ll know that if you make your next payment on 6/26 when you get your next statement, it would be applied on 6/28, and ~$280 of your payment will go to interst. If, however,you wait to make your payment on 7/11, it gets applied on 7/13, then that same payment will have $416 dollars going towards interest. If you paid the minimum, your principal would actually go up by about $16.
Of course, your next months payment will only start accruing from the 13th, so you could make up some of it the next month, but it’s just good to know exactly where you stand.
OpenOffice: daily-compound-interest-example
Excel: daily-compound-interest-example
This spreadsheet is not exact, but it gets within a couple pennies of what Citibank really charges me. If anyone has any ideas on how to make it better, please leave a comment.
Posted by john under General | Comments (0)
June 3, 2009
My wife has significant student loan debt from her time in law school. Not only was she paying tuition, but she had to pay living expenses to live in NY for three years, all paid for with loans. While I was really starting to track our finances, I began taking a longer look at our loan payments to track exactly how much we owed. It took me weeks to figure out what was going on, and since I bet we’re not the only ones to be confused, I thought I’d try and explain it here to save others some trouble. I’ll try and give the story without using the real numbers, but it will be tough.
We have 4 student loans, all services through Citibank:
- A federal loan, 3.5% fixed, $30,000
- A federal loan, 3.5% fixed, $30,000
- A small private loan, 4.5% variable, $10,000
- A large private consolidation loan, 7.75% fixed, $100,000
The key here that we failed to fully realize, is that all of these loans compound their interest daily, not monthly like all our other loans (mortgage, car, etc..). But more on that later.
The large consolidation loan is relatively new, as we just consolidated last year from variable rate loans from another services to the fixed rate at Citibank.
Citibank has lumped these four loans into two payments. The federal loans are grouped into account “-70″, and the consolidation and smaller private loans are lumped together in into another payment to account “-72″. The minimum payments we’ve been given are (again, made up numbers, but proportional): $250 for account -70, and $800 for -72 ($700 for the consolidation loan)
We’ve been making the minimal payment for the past several months, so imagine my surprise when I went to enter the loan into kmymoney earlier this year, and the principal on our consolidation loan hadn’t gone down, not one penny. Where had our money gone?
Deciphering the Citibank Statements
The first clue as to where the money was going figuring out how to decipher the Citibank bill. Most other bills we get tell us exactly how much we own on the loan, and call it the “balance”. However, Citibank does things differently. They list -two- balances. One labeled “Principal Balance”, and the other is the “Payoff Balance”. Our principal balance was still the full original loan amount. The payoff balance was listed as the “balance if paid on due date”.
Normally, I would think that the payoff balance would be the principal balance plus all the amount of interest gained in the month. $100,000 at 7.75% fixed interest should earn about $645 in a month ((.0775/12))*100.000 = ~$645. But our payoff balance was higher, somewhere around $101,000. That wasn’t right. Several calls to citibank later, and we finally figured out what happened.
First, understand this: No where on Citibank’s statement do you find the exact amount (principal + interest) that you owe. They say this is because interest is compounded daily, and so the actual amount you owe changes each day. I don’t see why they can’t just say “as of this date, this is what you owe”, but whatever. So, instead, they give you what you owe on the loan (principal balance) and what you would pay if you paid it off on the due date of the statement (payoff balance = principal + interest accrued this month). Ok…
But the number still weren’t adding up for us.
Citibank drags out sending their initial bill
The other clue, looking at past statements, they showed that our entire payment each month going to interest. That’s odd. Payments should be going towards interest AND principal. But every payment from the start went only to interest.
Our consolidation loan went through on may 31st, 2008. But by the time the check was cashed by the other servicer, and with Citibank shuffling their feet, we didn’t get our first bill until July, and it didn’t get paid until August (when it was due). And therein lies the problem. Our loan has accrued nearly two months of interest, before we made a single payment. I’m not 100% sure this was legal, but whatever.
Since Citibank doesn’t have a spot on their statement that shows how much interest you’ve accrued, the only way this shows up is that the payoff amount is higher than it should be. That’s what happened. We had accrued a lot of extra interest because of the lab between when the loan went through and when the first bill got paid. All of our payments since were going towards paying down that extra accrued interest, which was not clearly spelled out on the statement.
Why did it take us 6 months and we still hadn’t paid off the extra interest?
Citibank’s “minimal payment” is very, very, minimal
The final piece of the puzzle is the minimal payment that Citibank quoted us. It took us a long time to realize what a “minimal” payment means when you talk about daily compound interest. The principal + accrued interest is different depending on not only when you pay your bill, but when you paid your last bill. If you have a $100,000 loan, then every day you’re accruing ~$22 dollars a day ( (0.0775/354)*100000 , and this ignores accrual). Lets say you get your bill on the 20th, and it’s due on the 30th.
If you pay your bill exactly on the 30th, when the next month pay again on the 30th, then you’ve accumulated 30 days worth of interest.
But now lets say the next month you pay when you get the bill on the 20th. Now you’ve only accumulated 20 days of interest, and if you make the same payment it’ll go a lot further (more of the payment goes to principal, not interest). But if the next month, you pay on the 30th again, then you’ve now accumulated 40 days worth of interest.
Citibanks minimal payment, as far as I can tell, is tuned for a little less 30 days between payments, and a tiny bit towards principal above that. So if you pay irregularly, and some months pay at a larger interval (40 months), your minimal payment will not be enough to cover the amount of accrued interest. In other words, you can make your “minimal payment”, and still have the amount you owe go up.
Over the life of the loan, most long months will be balanced out by a short months, but it’s still quite a shocker wen you’re used to dealing with monthly interest accrual where you you can make your payment anytime within the payment window and be guaranteed how much goes to interest versus principal.
In my mind, the minimal payment should be the minimum needed to guarantee that no matter when you make the payment, your payment goes down. But that’s not the case.
Spreadsheet
After gathering all the information, I’ve created a spreadsheet in openoffice which takes the current balance of the loan, the interest rate, and the date the last payment was credited to the account, and returns how much interest has accrued for each day (including accrual). It’s not exact, but it gets within a buck or two what really happens on the loan, so it’s pretty close. If people want, I’ll clean it up (and clear out my real loan data) and post it here. With it, you can tell if you minimum payment will really be enough to cover the interest you’ve accrued since your last statement.
Conclusion
So, I finally have a handle on how the loans work. It’s very confusing, and Citibank seems to be going out of its way to make things confusing, but you can get through it. I’ve upped our payment and now we pay much more than the minimum and are taking decent chunks out of this loan with each payment. We’re still a long way from paying it off, but at least now we understand what’s going on.
Posted by john under General | Comments (9)
June 3, 2009
Several months ago, I wrote my Free Online Finance Trackers post, and I thought I was time for a followup. After several months, the winner was……
None of them.
But it’s not really their fault. I simply decided I needed a little bit more than any of them could provide. I wanted to track retirement plans, budget, loan payments, and paychecks, and not only find out where my money was going, but predict where it would be in the future. Combine that with the fact that I use small credit unions so I have to manually upload transactions anyway, and none of the options really fit my needs. Besides, I always felt squeemish about putting all my financial data online. Yes, I know these companies are all very sensitive to privacy, and I think they do a good job. I simply decided the risk factor was a bit too high for me after all.
Of all the online finance trackers, the one I used the longest was Wesabe. I spent a few months working with it. I think for a someone whose finances aren’t as complicated as ours, it would be a good fit. The few bugs I encountered the tech support was great and easy to work with. I did hit one bug however that they couldn’t seem to fix, involving their javascript graphs not taking into account all of my data (but only when viewed from my computer, when looked at it locally, it worked fine). They worked on it while, but when they still couldn’t fix it, I eventually gave up.
So what do I do now? I gave KMyMoney another spin, and settled on that. GNUCash is still too complicated for me. KMyMoney is set up to track every penny we spend now, and its working out pretty well. The graphing functions are a little cumbersome, and not as pretty as Mint or Wesabe, but they get the job done. I can import all of our finances, including retirement funds, and use several different algorithms to predict how much money we’ll have in the future. The loan feature keeps track of our monthly payments and how much interest we pay.
Now that I’ve taken the time to use a full financial software package, I can’t ever imagine going back to something like Wesabe. It’s just not powerful enough for what I need, nor is it designed to be. For people who just want to track a few accounts, like checking and credit accounts, it’s great. For someone trying to get a handle on all the complicated finances of the household, take the time to learn a full package.
And before anyone asks, yes you can easily run KMyMoney on a Gnome or XFCE desktop, you just need to install the necessary KDE libraries.
Posted by john under General | Comments (0)
June 2, 2009
So it looks like I did my usual post-for-a-while-then-disappear-for-a-few-months trick. I should really stop that at some point. So, I’m back now and resurrecting the blog. I’ve had several posts that I’ve been meaning to write for a while so there will be a few posts all in a row now.
First though, to catch up on my life. As of January, I left my old company (StackSafe) and took a position at the Johns Hopkins University Applied Physics Lab. A few weeks after I left, StackSafe went under. So there have been a lot of changes all at once. JHU/APL is locating 5 minutes from my house, so my commute drops from 1+ hours one way, to 10 minutes one way. I get 6 hours of my life back a week (StackSafe was letting me work from home two days a week). It makes a big difference. JHU/APL will also allow me to go to graduate school part time, which is what I’ve wanted to do for a long, long time.
In addition to that, Katy and I are expecting our first kid in early september, so there’s lot of preparations there as well. It’s unreal.
So there’s no lack of excitement going on, and that’s part of the reason I’ve been neglectful of the blog. I’m sure you readers understand. Both of you.
Posted by john under General | Comments (0)
