Thursday, June 30, 2011

Credit Card Usage - a Study of Convenience and Revolving Users

I was recently reading an article about John Gottman, who researches marriage relationships, where he said that he can predict divorce in a couple with 90% accuracy ( His research is interesting and valuable for couples getting married and for those seeking to improve their marriage relationships.


In addition to the Gottman article I recently pulled out a 2009 copy of the Journal of Financial Counseling and Planning as I was cleaning up my office. I scanned the Table of Contents and the title of one of the articles intrigued me; Utilizing the Theory of Planned Behavior to Understand Convenience Use of Credit Cards (Rutherford & DeVaney, 1999 – accessible online at In this article the authors try to predict whether people are convenience users of credit cards (pay off the balance each month) or revolvers (carry a balance and therefore pay interest on the balance). While they don’t give a number, such as being able to predict with 90% accuracy, they do present some interesting statistics to measure your own credit card behavior against.


I won’t be touching on all their research in this article, but the entire article is worth reading if you are interested in credit card research.


1.      The authors hypothesize that households with a negative attitude toward credit are more likely to be convenience users of credit cards. There are basically three attitudes toward credit: it’s a good thing, it’s a bad thing, and it can be good or bad. For the record, I see credit as a tool that can be used as a good or bad thing, but I also believe strongly that the faster you pay off all your debt the better off you will be. There are many financial planners that would not agree with me on that, arguing that carrying a mortgage on your home is a good thing (tax deduction, low interest, etc.), but I want the total freedom of not owing any money to anyone. But I digress.

The study that the authors conducted confirmed their hypothesis – those that have a negative attitude toward credit are less likely to carry a balance, and therefore are considered convenience users. The data seemed to be inconclusive for those who see debt as good or bad. I imagine it depends in some way on which direction you lean. As you can probably clearly tell from the above paragraph, I lean towards thinking credit is bad (mostly because of the negative effect I have seen credit usage have in people’s lives), and I certainly think that carrying a credit card balance is not a smart financial thing to do, and therefore I don’t carry a balance, so I am a convenience user of credit cards.

2.      Another hypothesis is that households with longer planning horizons (10 years or more) are more likely to be convenience users of credit cards. This makes sense – if you have a long-term outlook you are more likely to see carrying a balance as taking away from future consumption – whether you are looking at college funding for children or grandchildren or retirement. Spending money on interest now means less money to spend on things you need or want in the future.

The authors cite a number of studies that support the hypothesis, and in their own study they found that those with at least a 5-year financial planning time horizon were likely to be convenience users, but that having a time horizon of less than 5-years did not necessarily make someone a revolving user.

3.      Households that borrow for purchases beyond their basic needs are more likely to be revolving users of credit cards. Again, this makes perfect sense – if you are utilizing credit cards to live beyond your means, by definition you are likely to be carrying a balance. If you make $2000 a month, but spend $2200 and finance that other $200 with a credit card, your balance is going to continue to rise since you don’t have the extra money to pay off your balance. This, by the way, is a strategy that leads people down the road to financial destruction, as does Pay Day lending. You can’t continue to increase your balance, because as your balance increases so does your minimum payment. As your minimum payment goes up you now have to put more things on credit each month. In the example of someone spending $2200, imagine that their minimum payment was $50, which is figured into their $2200, but now their payment is $75, making their monthly needs $2225.

If you are making less than you earn you have three options: increase your income, decrease your spending, or do a combination of the two. Living beyond your means, and financing it with a credit card, is a strategy that will get you further and further behind.

The authors study found that even those who are considered convenience users splurge occasionally and will carry a balance for a time, but overall the research shows that those who leave beyond their means are more likely to be revolving users.

4.      And finally, a note on education. The authors hypothesize that household heads with higher levels of education are more likely to be convenience users of credit cards. Their hypothesis is supported – those with a college education are more likely to be convenience users when compared to those who have a high school education, or even to those who have some college (this may be partially because students tend to use credit cards while in school to pay for books, food, etc. – further research in this area would be interesting to see if these students see themselves as convenience users or revolving users, how soon they plan to pay off their balances, etc).

We have asserted, and will continue to assert, that education is one of the best investments you can make. This study supports our theory again.

I have only taken the space to discuss four of the author’s hypothesis. There are ten total and I would encourage you to read the article if you would like to learn more about this topic.


Correction from 6/24/11 Financial Tip: I stated that Minot was in South Dakota, but Minot is actually in North Dakota.


Ryan H. Law, M.S., AFC

Department of Personal Financial Planning

Office for Financial Success Director

University of Missouri Center on Economic Education Director


239E Stanley Hall

University of Missouri

Columbia, MO 65211


573.882.9211 (office)

573.884.8389 (fax)


Wednesday, June 29, 2011

China: Round Two

I just returned from our second trip to China.  Dr. Yao and I timed the trip so we could attend the 2011 Asia- Pacific Conference of the Association for Consumer Research.  Our goals, however, were to finalize a cooperative education agreement with Renmin University in Beijing, speak to students at both Renmin and Nanjing Aeronautics and Astronautics Universities, and interact with the nascent Chinese financial planning industry in Shanghai.  Accompanying us were my three children (aged 19, 22, and 25) and a local entrepreneur.  Here are my impressions



·         China continues to impress me with their development.  I could see changes from two years ago and much of it was for the better – except for air quality.  Even the locals complain about the air.  Believe it or not, there are mountains you can sometimes see from Beijing. 

·         The students in China are very interested in coming to the United States to study but it remains relatively expensive.  With an average annual urban household income of $12,000, the price tag for US tuition and fees is quite high and providing another $20,000 for living expenses is daunting.  Yet, the Chinese value education.  As such, accomplishing an overseas education for their children is major goal for families.  We have close to 700 students at MU from the Peoples’ Republic, our largest contingent of international students.  We hope to have more students come to MIZZOU, given the memorandums of understanding we have signed with major Chinese universities.  Likewise, Chinese universities would like for more US students to study in their country and many courses are taught in English.  (By the way, I was so proud of my children, when they spoke about college life in the United States to the students of these Chinese universities.)

·         Speaking of living expenses.  Following economic reform, citizens of the Peoples’ Republic no longer receive a free college education, a secure job for life, medical care, or retirement income from the government.  These are now the citizens’ responsibility.


·         This time, due to my children, I visited some night spots for younger people.  (Yes, I proudly anchored one end of the age spectrum.)  In Beijing and Nanjing we went to loud techno dance clubs or Karaoke clubs, with tables that had a Y 3,000 (about $500) minimum.  In Nanjing, we even sat at one, given that our host paid the tab.  (Yes, I did sing at the Karaoke bar.) We were the only non-Chinese in the club and the club was packed with young Chinese professionals and other young adults.  Note: If you go to Beijing, the subway closes at 11:00 pm!  We took taxis back which are relatively cheap (about $3) but you can ride their subway for about $0.35 anywhere in the city of 19.6 million people!  The subway is beautiful, efficient, and safe.  It reminds me of the Metro in Washington, DC.

·         Quality food exists in a wide range of prices, depending on the atmosphere you seek.  You may find yourself enticed by some quite exotic dishes.  Let’s just say that no part of a sacrificed animal goes to waste and no animal is immune to being sacrificed.  I loved the barbecued duck tongues followed by barbecued snails, on our last night in Nanjing.  My least favorite was turtle skin soup in Beijing.  I ate it, though!

Financial Planning Impressions:

·         There are 10,000 CFPs in China to serve 1.3 billion people, although 2 million financial professional work in China.  We have 60,000 CFPs in the United States to serve 312 million people.  Conclusion, the potential growth in the market for financial planning in China is staggering.

·         There are an estimated 600,000 millionaires in China, while there are 9,000,000 in the United States.  In China, 60% of the millionaires are business owners.

·         When meeting with a large Chinese financial planning firm, we were told that their 18,000 clients have $5 billion in assets with an average age of 40!  This is a much younger profile than in the United States and it points to an important dynamic within the younger generation of Chinese, following economic reforms.  They are eager to work and take business risks to achieve success.  The growth in business for the financial planning firm is about 200 new clients per week, implying they need an additional 2 advisors per week.  Yes, they have need for English speaking planners to work with their international clientele – particularly in Shanghai.

Economic Development Opportunities:

·         The bullet train from Shanghai to Nanjing was quite the ride.  We topped out at 326 kilometers per hour, or slightly more than 200 miles per hour.  A modern transit system exists in all the cities we visited.  In Hong Kong, we were able to check our bags for our flight at the downtown train station – 25 kilometers from the airport.  This was very convenient and the bags made it back to Chicago/St. Louis/Detroit/Philadelphia – wherever they were supposed to end up.  Mass transit development and use in the United States is sadly lagging our Asian friends.

·         Many Chinese want to expand their business with the United States and to have United States’ firms expand business development in China. Barriers to cross-Pacific economic exchange are rapidly changing but I caution investors to develop relationships of trust with those you are working, regardless of which side of the Pacific you reside.  There are many people who desire to get-rich-quick in both countries.  While many have, we seldom hear the bragging of those who fail.  Regardless, we will see an expansion in our economic ties with China.

·         Doing business with the Chinese is different from the United States.  Think of the United States as being very linear from start to finish.  The Chinese are much more deliberative and can take quite a bit of time to work with you in order to discover if you have guanxi – high level of trust.  Thoughtful, meaningful relationships are the key to business relationships and, while eating together is an expectation, it is a time to eat.  It is not a time to conduct business.

There are many more experiences and impressions.  Our group would agree that we see China as an important partner for the future.  China and the United States have much to gain from each other.  We will be working with them.  Certainly, issues exist with regard to labor markets and trade issues – which are outside of my area of expertise.  There are also opportunities for financial success.  Importantly, both counties have the primary goal of realizing financial dreams through the decisions of the family.  That, alone, can provide the seeds for our growing ties. 

Thursday, June 23, 2011

What is Most Important?

A month ago, when the tornado hit Joplin, Missouri, Dr. Weagley wrote a financial tip about being prepared (


Today I would like to discuss a similar theme as residents of Minot, South Dakota, are dealing with potentially serious flooding ( As of the time I was writing this Tip, 12,000 residents had been evacuated and some areas of the town are predicted to get five feet of water or more from the Souris River, which runs through the middle of the town. One report that I heard on National Public Radio yesterday said that some areas are predicted to get water as high as the roof life and possibly completely engulfing other homes.


On Wednesday as my wife and I were discussing this story and the evacuations that had to happen rather quickly we asked ourselves what we would take if we only had 24 hours and you knew that everything else in our home would most likely be ruined by the floodwaters. We stayed up for a while discussing what we would take and here are some of the things we discussed:

·         A tent and sleeping bags

·         Blankets (especially if the evacuation happened in the winter)

·         Photo albums

·         Laptop/computer

·         Religious books

·          A few changes of clothing for everyone

·         Food & water

·         First Aid Kit

·         Flashlight and batteries

·         Emergency Preparedness Kits

·         Cash

·         Important document file

·         A few special pieces of art (one my grandpa made, and one my wife’s grandparents had in their home)

·         Cash

·         A couple of books

·         A few select toys for the kids

I imagined us packing up our van with these things then closing our door, knowing that we may never be able to return to the house, that we would feel sadness about the things we were losing, but on the other hand I would feel grateful that we had some warning and could gather up a few things, but most of all grateful that our family would be together and safe.


It is a good idea to think about these types of things and ask yourself “Am I prepared for a disaster?” Assess where you are currently in your emergency preparedness, and what you can do to better prepare.


It is also a good idea to ask yourself “What would I take with me if I had to evacuate in 24 hours?” I challenge to sit down and write a list of what you would take with you. Please visit our blog at and share your list – do you have some of the same items as my list? What is on your list that isn’t on mine?


To touch a bit more on the financial side, it is important to have cash and an emergency fund available that you could use for shelter, gas and food. Also, be sure your insurance is up-to-date and know what is covered (flood is NOT normally covered by homeowners insurance – you have to buy flood insurance separately). Have a good home inventory and keep all your important documents in a safe location. For more details about these things see Dr. Weagley’s Tip about Being Prepared:


As I was re-reading Dr. Weagley’s post I decided to quote him to close out this week’s tip as I felt it echoes exactly what I wanted to say:


“Finally, nothing can prepare us for the aftermath of a disaster the caliber of the tornado that hit Joplin, New Orleans and Katrina, or Japan's recent earthquake and tsunami. I, however, do know something about the human spirit. If we are faced with disaster, we will be challenged but we will prevail. It is what we do. We survive to grow and to love, yet again. Being prepared just makes it easier for that human spirit to blossom anew.”


The people of Minot will prevail, and in the meantime our thoughts are with them.


Ryan H. Law, M.S., AFC

Department of Personal Financial Planning

Office for Financial Success Director

University of Missouri Center on Economic Education Director


239E Stanley Hall

University of Missouri

Columbia, MO 65211


573.882.9211 (office)

573.884.8389 (fax)


Monday, June 13, 2011

Small Steps to Your Goals

One of my friends asked me what I’m doing this summer.  She is one who plans things for the entire coming year.  She makes lists, puts events on her calendar and always has something going. Next to her I always feel very behind and scattered.  But I have to stop and remind myself that her goals are not my goals.  And how I reach my goals is very different than how she reaches hers.


Often when you read about goals, you might read about short term, intermediate and long term goals.  Each of these may have time frames connected with them.  An example might be a short term goal could be 1-2 years; mid-term goal of 3-7 years or long term could be 10 years.  Unfortunately, these types of definitions do not take into consideration a person or family’s situation.


People and families who tend to plan and write down their goals are more likely to achieve those goals.  How people and families define their goals is very different.  Short term for me could be one week.  Short term for someone else might be one month or even one hour. Overall time frames should fit the needs of the person or family—not what some definition says.


A key to meeting goals is to make sure they are realistic and manageable.  One way to make them manageable is to create small steps to reach that goal.  Here is an activity you can do with your family or a group to help people visualize how small steps help you reach your goals.


Have everyone line up against a wall (with their backs against the wall). The goal is for everyone to get to the other side of the room.  How do you get there? Is it possible to leap across the room in one big step?  Probably not.  So have everyone go across the room and count their steps. 


Discuss the following:

·         Did everyone reach the goal?

·         How many steps did each person take?

·         Did everyone reach the other side at the same time?

·         Were there any obstacles (chairs, furniture, other)?  How did you decide to handle those obstacles?

·         Do you wish you would have taken a different path?


Then have a discussion as how this relates to setting and reaching goals in life.  We have to decide on a goal and break it down into manageable small steps or tasks.  Some people could accomplish a goal in 5 tasks, but another family member might need 8 tasks to finish the same goal.  If things get too challenging, people often quit.  It might be you need to rethink a goal and break it down into even smaller steps.  Or give yourself more time to reach that goal.

One way to break a goal down into manageable, smaller steps is to write the goal and then write the steps to accomplish that goal.  An example could look like this:

·         My goal is:

o   Today, I will:

o   Tomorrow, I will:

o   By the end of the week, I will:


Another could be breaking a large task into smaller tasks over a longer time frame. Two years ago I started a very long book.  After reading for a year and a half, I still had 379 pages left!  It struck me one day that if I read 1-2 pages every day, I could finish the book within a year.  And right then it felt manageable.  Reading 1-2 pages was do-able.  But when I sat and stared at 379 pages, I felt overwhelmed.


Maybe your goal is to save for a summer trip.  You figure out you will need $400 to cover expenses, and for your budget that is a huge amount to come up with all at once.  What if you break it down by days and months?  Could you set aside $3 a day for 3 ½ months?  Or $2 a day for 6-7 months?  That might be much more do-able than taking $400 out of the budget all at once.


Make things manageable for you and your family. Small steps make a big difference in helping you reach your goals!


University of Missouri Extension Building Strong Families—Go For It: Setting Goals module


Lucy Schrader
HES Associate State Specialist and
Building Strong Families Program Coordinator
University of Missouri Extension
162 Stanley Hall
Columbia, MO  65211


Friday, June 10, 2011

Popular Mythology

I was recently visiting my father-in-law and read an insightful article by Candice Choi in the Virginia Pilot (5.29.11) focused on financial life after college.  I agreed with so much of it, that I wanted to put my own spin on her ideas.  So, here goes….


Many young people are getting ready to start their work lives, having completed their education.  Congratulations, the practice of your personal financial life has begun.  The “more seasoned” among us can attest to the fact that learning personal finance will never stop.  Several young people have recently told me that they are scared of the economy, taking the wrong job, making major financial mistakes, and they don’t think they will either get sick or be able to retire.  They are wrong.


Myth 1: There are no jobs.

Yes, the news is not bright and our newscasters pull the shades down even tighter on our outlook toward our futures.  While unemployment remains stubbornly high, there are always jobs available, as there is always turnover at companies and other worksites.  The key for the young person is to be ready when those opportunities arise.  The worst thing is to sit at home wallow in self-created defeat.  Join professional organization, do volunteer work, take a job that you don’t want long-term but that will put you in front of people to help you build your network.   Making these connections and being an active member of your community will do more for your employment than posting your resume on every general job site….though that won’t hurt, either.


Myth 2: Saving for retirement is not your problem.

Yes, it is your problem.  You need to begin to save for your retirement as soon as you begin work.  Try to save 10% of your salary on an annual basis for this stage of your life that, admittedly, seems so far away that it shrinks in importance.  It is very important.  Ask yourself if you’d rather plan to live to retirement or die before then.  Most would rather live.  Hence, save your money.  Defined contribution retirement plans which allow you to save your money for your retirement, such as 401(k) plans, now dominate the private employment sector.  In fact, only 15% of private employers still maintain a defined benefit retirement plan, where benefits are provided.   Compound returns over time makes saving for retirement easier.  Yet, you have to save and you need to let time do the work for you, while diversification protects you from mistakes.


Myth 3: Don’t buy a home.

This could be the best chance for you to purchase a starter home, given prices and interest rates.  You will need a down payment but the Federal Housing Administration still has programs where you can purchase a home with only 3.5% down payment.  Locally, rates on a 30-year loan are 4.765% and 3.835% for a 15-year loan.  You won’t see interest rates this low many times in your life.  Before you purchase, however, make sure you will be able to live the home long enough to pay for the closing costs and to realize some appreciation.  If you don’t plan to live in an area very long or the area where you find yourself is in a continuing downward spiral, renting remains the best option.


Myth 4: Use debit cards, not credit cards.

Yes, using debit cards can keep you out of credit difficulties, by forcing you to live within your means.  While living within your means is mandatory for financial success, credit cards do provide fraud protection should your card be stolen or a purchase turns out to be a sham.  Moreover, judiciously using credit cards can help establish your credit history – a necessity for many of life’s purchases.


Myth 5: You are young and do not need health insurance.

Wrong.  You need health insurance, as well as disability income insurance.  Those in the 19 to 29 year age bracket are more likely to be uninsured than are other age categories, partly due to young people having jobs that do not offer insurance but it is often a result of choice – or laziness, or ignorance.  Current health care policy allows you to continue on your parents’ policy until you are 26 years old and this age limit is greater in some states.  Make sure you have health insurance, as you never know when you might need it.  I admit to letting this lapse in my life, when I was 27.   I was lucky.  I ended up on welfare, through California’s Medicaid plan, Medi-Cal, as a result of an automobile accident and a five week hospital stay for a fractured skull.  This was a hard way to learn about the benefit limits of the student health insurance I carried at the University of California-Davis.


Finally, take control of your financial life now, before your financial life takes control of you.  A bad start to your financial life can create a cruel master that will rule your decisions for quite some time.  On the other hand, a good start on the path toward financial success will be a welcomed partner with whom to share life.


(Please, post your stories from your financial lives – good and bad.  Your experiences will have a much larger impact if they are shared.)



Robert O. Weagley, Ph.D., CFP(r)

Chair, Personal Financial Planning

241 Stanley Hall

University of Missouri

Columbia, MO  65211

573-882-9651 - o

573-884-8389 - f


Thursday, June 2, 2011

Is An Adjustable Rate Mortgage Right For You?

Lately I have been hearing a lot of commercials that go something like this:

“Have you been thinking about buying or refinancing a home? If so, there has never been a better time to do so! Rates are at an all-time low and so are home prices! You can get a rate as low as 3.05%, fixed for the first 5 years! Call us today!”

A rate of 3.05% sounds tempting, doesn’t it? There is more to it than what it may seem at first, though, and before you jump and make that call, let’s look at some important terms and numbers.


Adjustable Rate Mortgage, or ARM, is what is being advertised here. As the name implies, the interest rate changes according to market conditions.

Initial Interest Rate: The stated interest rate that the loan starts out with – in this case 3.05%

Fixed or Adjustment Period: The time period in which your rate cannot increase. In this case the 3.05% interest rate has an adjustment period of 5 years.

Yearly Adjustment Cap: This is the maximum your interest rate can increase annually.

Interest Rate Cap: The maximum your interest rate can increase to over the life of the loan.

3/1, 5/1, 7/1: With an ARM you will see two numbers – the first number represents the adjustment period, so 3, 5 and 7 years, and the second number represents how often the interest rate can increase after that, in most cases it is annually.


If you run the numbers for an ARM it might look good at first. Let’s take a look at a scenario:

·         $165,000 mortgage

·         30 year fixed rate 4.49%[1]

·         5/1 ARM with an initial interest rate of 3.05%, a yearly adjustment cap of 2% and lifetime cap of 5% (which could take the rate as high as 8.05%)[2]

The payment under the fixed rate would be $835.05 while the ARM would be $700.10 (both are principal and interest only, so they do not include taxes and insurance). That is a big difference! With the ARM you save $135 a month, $1620 a year, or $8000 over the first 5 years.

But then the adjustment period ends. Under the terms of this ARM your rate can increase as high as 5.05% as soon as the fifth year ends, but let’s say it only increases 1% per year until it hits the cap, 8.05%, in year ten.  Here is how your payment changes:

·         Year Six: Interest rate 4.05%, payment $779.08

·         Year Seven: Interest rate 5.05%, payment $859.87

·         Year Eight: Interest rate 6.05%, payment $942.00

·         Year Nine: Interest rate 7.05%, payment $1025.04

·         Year Ten: Interest rate 8.05%, payment $1108.59

On year ten you are now paying $273 more than you would be paying on the fixed rate mortgage. Under a 30-year fixed rate mortgage you would pay a total of $300,618, while under the ARM you would pay back $364,639.

Of course, some assumptions are made above that may not actually happen. Maybe the rate will only go up .25%, or won’t increase at all, or may drop in year eight, or any number of other scenarios could happen. You need to look at the worst case scenario, though, and see if you are prepared for that. In fact, the worst case scenario (increase 2% per year until it hits the cap) would do this to your payment:

·         Year Six: Interest rate 5.05%, payment $862.63

·         Year Seven: Interest rate 7.05%, payment $1036.85

·         Year Eight: Interest rate 8.05%, payment $1126.88

Your total payoff is now $375,818.

There are arguments for ARMs, of course, the most common ones being:

·         I plan to move after a few years

·         I need a lower payment to get into a home – my salary will increase before the payments do

·         I can just refinance to a fixed rate if rates go up

All of these are valid points, but have some problems as well.

What happens if you don’t end up moving? Maybe you thought your job would take you elsewhere, but it doesn’t. Or even if you do move, what if you can’t sell your home? Can you afford two mortgage payments? Even if you find renters, what if rent doesn’t cover the full mortgage, or what if they move out and you can’t find new renters, etc. Of course, these things can all happen to someone with a fixed-rate mortgage, but you can’t assume that just because you currently think you are going to move in a few years that you are 100% guaranteed to move or that you will be able to sell it.

As far as needing a lower payment, what happens if your salary doesn’t increase as you thought it would and you can’t afford to pay $1126 a month? That’s a big increase from the original $700 payment. If this is the scenario, you should purchase a home with a lower mortgage with payments you can actually afford if they increase (or better yet, get a home with a lower mortgage and get a fixed rate with payments you can afford).

Finally, as far as refinancing if rates go up, you could do that, but rates have gone up. Instead of 4.49% for a fixed-rate mortgage the rate might be 6.49%, which would increase your payment to about $1041. Also, what if you can’t refinance? Perhaps lending standards are more stringent, or your employment has changed, or you have some credit problems and you can’t refinance anymore at the new rate?

ARMs are becoming more popular – in fact, an article on CNN Money[3] indicates that the number of people financing with an ARM has increased 75% since last year, but ARMs are laden with problems that you need to look at before you jump in.

As always, we welcome your comments and thoughts on our blog at

Ryan H. Law, M.S., AFC

Department of Personal Financial Planning
Office for Financial Success Director
University of Missouri Center on Economic Education Director

 239E Stanley Hall
University of Missouri
Columbia, MO 65211

 573.882.9211 (office)
573.884.8389 (fax)


[1] The average 30 year rate on 6/2/11, as indicated on

2 Rate is the average 5/1 rate on 6/2/11, as indicated on, and the yearly adjustment and lifetime cap are from a company that is doing a lot of ARM advertising.

[1] The average 30 year rate on 6/2/11, as indicated on

[2] Rate is the average 5/1 rate on 6/2/11, as indicated on, and the yearly adjustment and lifetime cap are from a company that is doing a lot of ARM advertising.