Today marks my first trip ever to the West Coast. Although contrary to my intuition that my trip would be uninteresting to others, including regular readers of this blog (my thanks to both of you!), I’ve decided to dedicate a post to to my expedition. I must say that I have been greeted with open arms. I have met with fellow natives and residents of the great state of Florida, residents of the great states of Hawaii and Alaska, as well as those that reside in the home of Prosper Days, San Francisco California. Although I am known (although not very well) as WealthBoy, I have found myself in the habit of introducing myself with my birth-given name.

Regardless of my introductions, I believe that Prosper Days will prove to be a productive and exciting trip for me. I only wish my better half could be here as well as our beautiful young ones. Unfortunately, we decided the trip to be much too taxing on them, and they would be better off back at home with Mom. Instead, we decided to tax Dad by sending him on the redeye back from San Francisco to Philadelphia from 10PM PST to 6AM EST (5 hours in the air). Ultimately I will arrive from Philadelphia to Jacksonville at 10:20AM the following day (8.5 hours travel time).

The story isn’t much better from there. In my haste to secure my trip from Jacksonville to San Francisco, I failed to secure transportation from the Jacksonville airport back to my home upon my return home. Much to my chagrin, after I booked my flight I came to learn that my wife had previously scheduled a play date from 10:30 until 11AM. It takes about a half-hour to get from our home to the airport, so that means it is likely I will be home no earlier than noon.

Being the analyst that I am, I surmised that WealthBoy(.com) does not yet provide sufficient income to merit a cab ride back home, so I am more than glad to await for the family to complete the play date to go pick up Dad. Later that day we will make the two-and-a-half hour drive to Orlando for our soon-to-be two-year-old. To be honest, it’s not really a big deal but I’m doing my best to make this story as interesting as possible. I would do anything for my family, especially if it involves having a good time with Mickey Mouse.

All of this in the name of peer-to-peer lending. RateLadder asked if I would be blogging about the trip. I told him that I was having a very hard time with the blogging. Despite his encouragement it is hard for me to come up with original material. I told him that my best (well…. most popular) article (Gas in the U.S. is Cheap) actually began as a repost/commentary on an article about the U.S. Auto Market being in recession. So how the hell did I come to conclude that Gas in the U.S. is Cheap?

That’s a good question that at this point I would have a hard time answering. Perhaps it may be obvious to you, or perhaps some other day when I am not wrought by jet lag and oversized west-coast margaritas I might be able to answer that question. Actually I only had one oversized west-coast margarita, one shot of excellent tequila, and many beers, but again… That’s another story.

I’m still finding my place as a blogger as well as becoming a dispenser of good information. I’ve found that the most interesting bloggers have a propensity perform both acts exceedingly well. We shall see how I ultimately perform in my endeavor. I suppose I summed it up well when I told RateLadder, “I guess most bloggers become truly successful (bloggers) when they are able to integrate their blog well with their life.” Up until now I have not done that, but perhaps beginning with this post I will make a greater effort to do so.

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If you ask the average American what they think of current gas prices, they would probably tell you that they think $3 per gallon is too high. If you ask me, I think that Americans are spoiled and they don’t realize how much cheaper gas is here compared to the rest of the world. Not only is the absolute price of gas cheaper in the U.S. than anywhere else, but with one of the highest per capita GDP in the world (ranked 4th in 2006 according to the International Monetary Fund) it is even cheaper in relative terms. Here is the average end-use price per liter for January 2008 in several nations:

France	$1.988
Germany	$2.061
Italy	$1.961
Spain	$1.568
UK	$2.037
Japan	$1.427
Canada	$1.050
USA	$0.809

Source: End-User Petroleum Product Prices and Average Crude Oil Import Costs report from the International Energy Agency

By comparison, the average price of fuel in the U.S. for January of 2008 was $3.06 per gallon, but in Germany it was $7.80 per gallon! The UK isn’t that much better at $7.71 per gallon. Even our neighbors to the north (Canada) are paying nearly $4 per gallon ($3.97 to be more precise) so I think those of us in the USA really have very little to complain about.

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When I purchased my new home about a year ago, I went with the builder’s preferred lender because of the lower closing costs with the incentives. Because I also hadn’t yet sold my prior home and really had no cash to put down, I did 100% financing with an 80/20 loan. What’s an 80/20 loan? Well, if you have excellent credit, it is a method of doing 100% financing and avoiding having to pay PMI. It is actually two loans. A primary mortgage for 80% of the value and a second mortgage for 20%. Because the loan-to-value on the first mortgage is 80%, you do not have to pay PMI. Another thing I did was make the primary mortgage interest-only for five years.

Never in a million years would I ever recommend someone do 100% financing with interest only loans, especially in this market! So why did I use this kind of financing when I would never recommend it? First of all, I had plenty of equity in my old home. I owed $190k and ultimately it sold for $290k. Even if I hadn’t sold it, I could have rented it for break-even.

I also anticipated that my prior home wouldn’t sell before closing on the new home (and I was right). I wanted to be able to pay down the mortgage on the new home and be able to improve my monthly cash flow, which is why I did interest-only on both loans. If I had bought the new home with a fixed mortgage, paying down the mortgage would reduce the balance but the payment would remain the same. Paying down a fixed mortgage reduces the amount of time to pay it off and reduces the total interest paid over the life of the loan.

Do I have any regrets? The interest rate on the first mortgage is 6.625%, which seems a bit high to me, especially for a 5-yr fixed period and adjusting after that. I wish I had shopped around a bit for similar terms but at a lower rate. Mortgage rates have been on a fairly steady decline since the middle of last year, so I will likely be refinancing this spring or this summer.

I’ve been keeping an eye on the 30-year Treasury Bond. Although not the same rate, fixed mortgage rates trend similarly to long-term treasury bonds and notes. The yield on the treasury bond also sometimes trends with the stock market indices as well. The 30-year bond hit a low in January right behind the Dow Jones Industrial Average. I’m looking forward to the next time Wall Street has a tough time with economic reports, because it may present the perfect refinancing opportunity.

Shopping for a mortgage can be tough. I had been using BankRate’s mortgage comparison tool for a while, until I came across Yahoo!’s. I like Yahoo!’s better because it allows you to enter an estimated range for your credit score (only has three ranges, but it’s better than 0). It also allows you to filter the results based on the term, monthly payment, points, lock term, and fees. The best feature of all is that the results are a single click away, rather than having to click through several screens on BankRate.

I’ve also been working on improving my credit score. I want to watchdog my score over the next month, so I’m trying out myFiCO’s ScoreWatch free for 30 days. It allows you to monitor your credit score, and when it changes you can receive alerts. Overall, ScoreWatch seems like a pretty good product, although I’m very disappointed in the simulator. You can try different scenarios to see how it improves your credit score, but it gives you a large range for the result (20 points or more) rather than an exact score. You would think that the people that invented the FICO score would be able to give you an exact number! I simulated paying my credit card balance in full, and the result was a score of 760-780. Not very helpful since I already have a score in that range, albeit on the lower end.

ScoreWatch is certainly a great thing to have if you’re looking to refinance soon. Right now my score is 760, so I’m basically right on the line of the top-tier for a 30-year fixed mortgage. I’d like to get just a little bit over the line. Although I never carry a balance on my credit cards, because there is a balance when the statement closes (that I subsequently pay off in full), it appears as a balance on my credit report. I use only one credit card to take full advantage of cash back. This month I’m going to experiment and try paying the balance in full (or as close as I can, give or take a few transactions) before the statement closes. We’ll see if it improves my score.

The last thing I’m doing to prepare is paying down my current mortgage as much as possible. At the end of last year, I used my annual bonus to pay it down considerably. I will be filing my tax return soon, which will also provide a few thousand to pay it down a bit futher. My goal is to get it down to about $150k before refinancing. Right now it is sitting at $168k. Between some cash I have in brokerage accounts, my checking account, and the tax return, I think I should be able to get very close to $150k. I want to have as small of a balance as possible because it will also mean a smaller monthly payment after I refinance. I would be very comfortable with a $150k balance, because I could likely rent out my home at some point in the future for positive cash flow.

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Last month, the PMI Group released their winter 2008 risk index. The risk index ranks the nation’s largest 50 metropolitan areas according to the likelihood that home prices will be lower within the next two years. California and Florida had several metropolitan areas with very high risk. If you are looking to relocate any time soon, you may want to avoid those two states and perhaps look to Texas instead. Texas seems to provide a much more stable housing market in terms of price stability, with several metropolitan areas having less than a 1% chance of lower home values in the next two years. If you’d like to see the report in its entirety, you can see it here.

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