| My 1st Post Looking for Advice |
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retire-early
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| My 1st Post Looking for Advice |
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I just want to see how you would tackle my current finances. Which order should I pay off my loans.
HELOC Loan - 60 months left ($460 a month)
Car 1 - 48 months left ($350 a month)
Car 2 - 14 months left ($500 a month)
I hate owing money but most of these purchase are needs or investments with the exception of car 2  .
I have excess of about 1K a month.
OK, let's hear some advise.
Thanks for reading.
"Live way below your means and opportunities will come knocking"
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Tue Jul 12, 2011 9:22 pm |
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braje
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Not enough info
What are the interest rates?
Do you take the standard deduction on your income tax or itemize (the interest on the HELOC may be deductable.
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Tue Jul 12, 2011 10:03 pm |
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retire-early
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quote:
Originally posted by braje
Not enough info
What are the interest rates?
Do you take the standard deduction on your income tax or itemize (the interest on the HELOC may be deductable.
That is the reply I'm looking for.
Yes I do itemize. The HELOC was borrowed against my primary residence. It was used to purchase a rental property.
HELOC Loan - 60 months left ($460 a month) - 5.9%
Car 1 - 48 months left ($350 a month) - 6.5%
Car 2 - 14 months left ($500 a month) - 2.9%
"Live way below your means and opportunities will come knocking"
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Tue Jul 12, 2011 10:09 pm |
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oldguy
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You have about $51,000 i loans - it might be best to keep them for the terms. Use your $1000/m of extra income to invest in longterm products such as an Index Fund.
At $1000/m it could be about $100,000 in 6 yrs (historic compounding). And bump it up to $2300/m as the loans drop off - that could be about $1,100,000 about 12 yrs later.
What is the status of the real estate? Does the rental unit have equity?
As for the retire-early part - it depends on your Net Worth, how old you are, marital status, number of kids, and so on. The $1.1M probably won't do it - but if you already have a million stashed in real estate and 401k's? That's different.
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Wed Jul 13, 2011 12:13 am |
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retire-early
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quote:
Originally posted by oldguy
You have about $51,000 i loans - it might be best to keep them for the terms. Use your $1000/m of extra income to invest in longterm products such as an Index Fund.
At $1000/m it could be about $100,000 in 6 yrs (historic compounding). And bump it up to $2300/m as the loans drop off - that could be about $1,100,000 about 12 yrs later.
What is the status of the real estate? Does the rental unit have equity?
As for the retire-early part - it depends on your Net Worth, how old you are, marital status, number of kids, and so on. The $1.1M probably won't do it - but if you already have a million stashed in real estate and 401k's? That's different.
The 1k/m in 6 yrs to be 100k is attractive but I don't like owing money.
In regards to retire-early part - some little info: 550k in family 401k's, 250k home equity, 4 vehicles (40k worth low estimate), family pension 60k a year as of today but could not draw till 60yrs old. if we work another 5-7 years the pension might go up to 70-75k a year. i'm only 48 so it will be another 12 years before i can touch my pension and that is my biggest challenge. my goal is 3 yrs but realistically it will be 5-7 years then work odd/fun jobs for 5 years before drawing any money. another challenge is the kids, i have 1 in college and 1 in HS. i might just post a different thread for "retiring early".
"Live way below your means and opportunities will come knocking"
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Wed Jul 13, 2011 3:33 pm |
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littleroc02us
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What I don't get is your signature, you owe $51k in loans for stuff that is a depreciating asset and for a heloc loan for who knows what. Your problem is there isn't a loan you haven't signed up for. As for paying them back, sell!!!!
First what did you spend 27,600 on? As for cars mine are all paid for, why do you have payments? What else is amazing is that you have 1k left after all these payments. Personally, if you have 1k to put extra towards debts then I would get the smallest paid off first, which frees up cash to pay off the next. It will take you over a year and a half to get rid of the cars. Stop borrowing money for things you cannot afford.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Wed Jul 13, 2011 3:53 pm |
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retire-early
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quote:
Originally posted by littleroc02us
What I don't get is your signature, you owe $51k in loans for stuff that is a depreciating asset and for a heloc loan for who knows what. Your problem is there isn't a loan you haven't signed up for. As for paying them back, sell!!!!
First what did you spend 27,600 on? As for cars mine are all paid for, why do you have payments? What else is amazing is that you have 1k left after all these payments. Personally, if you have 1k to put extra towards debts then I would get the smallest paid off first, which frees up cash to pay off the next. It will take you over a year and a half to get rid of the cars. Stop borrowing money for things you cannot afford.
In the end borrowing this money is still way way under my means. There are some items I just can't pay cash... like the purchased of my dream car (55k) 3.5 years ago and now I have 14 months left. In the end you have to 'LIVE' and feel 'ALIVE'.
You can borrow money as long as it is way under your means.... NOT WITHIN or OVER but way under your means.
You can't live on RICE and BEANS forever.
"Live way below your means and opportunities will come knocking"
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Wed Jul 13, 2011 4:14 pm |
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oldguy
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quote:
like the purchased of my dream car (55k) 3.5 years ago and now I have 14 months left. In the end you have to 'LIVE' and feel 'ALIVE'.
Or you have to make it thru your Mid-Life Crisis and learn to quit doing things like rationalizing cars as toys, not tools? (Don't feel bad, we had a neighbor who mortgaged the house, bought a Winnebago & a horse, left his wife, and ran away to the mountains when he was your age).
As for 4 cars - I know the drill, when our kids were in college we lined up all 4 and 'caravaned ' to the local Fat Lube - that, and college, is a big drain on the finances for a few yrs.
As for the "hate" debt - financial decisons are better when based on math & risk analysis, not emotion. Eg, periodically I refi a rental and add $50k to a loan. That costs $300/m, ie $108,000. I place the $50k lump sum in an 11%/yr index and let it compound to $1,150,000 in 30 yrs. After using that leveraging tool for the past 35 yrs, I have come to embrace debt (or is that also emotional?)
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Wed Jul 13, 2011 4:37 pm |
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retire-early
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quote:
Originally posted by oldguy
quote:
like the purchased of my dream car (55k) 3.5 years ago and now I have 14 months left. In the end you have to 'LIVE' and feel 'ALIVE'.
As for the "hate" debt - financial decisons are better when based on math & risk analysis, not emotion. Eg, periodically I refi a rental and add $50k to a loan. That costs $300/m, ie $108,000. I place the $50k lump sum in an 11%/yr index and let it compound to $1,150,000 in 30 yrs. After using that leveraging tool for the past 35 yrs, I have come to embrace debt (or is that also emotional?)
OK, you are good! Congratulations Mr. Millionaire!
"Live way below your means and opportunities will come knocking"
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Wed Jul 13, 2011 5:27 pm |
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littleroc02us
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[quote="retire-early"
In the end borrowing this money is still way way under my means. There are some items I just can't pay cash... like the purchased of my dream car (55k) 3.5 years ago and now I have 14 months left. In the end you have to 'LIVE' and feel 'ALIVE'.
You can borrow money as long as it is way under your means.... NOT WITHIN or OVER but way under your means.
You can't live on RICE and BEANS forever.[/quote]
I don't mean to be a pest, but if you have to borrow money to buy a car or something other then a house then you can't afford it. When you borrow the money to buy a 55k that shows me where your priorities are. My thinking is the same as Dave Ramsey's "live like no one else, so that later you can live like no one else". Meaning you sacrifice all of these toys and pay off all your debt and the mortgage and invest 15%, so that later you can invest gobbles of money above the 15% you can have millions when you retire and absolutely no debt and very little risk.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Wed Jul 13, 2011 7:33 pm |
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littleroc02us
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quote:
Originally posted by retire-early
As for the "hate" debt - financial decisons are better when based on math & risk analysis, not emotion. Eg, periodically I refi a rental and add $50k to a loan. That costs $300/m, ie $108,000. I place the $50k lump sum in an 11%/yr index and let it compound to $1,150,000 in 30 yrs. After using that leveraging tool for the past 35 yrs, I have come to embrace debt (or is that also emotional?)
OK, you are good! Congratulations Mr. Millionaire! [/quote]
Question Old Guy. What happens to all of the debt that you have ammassed throughout the years when God forbid you pass away?
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Wed Jul 13, 2011 7:40 pm |
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retire-early
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quote:
Originally posted by littleroc02us
[quote="retire-early"
In the end borrowing this money is still way way under my means. There are some items I just can't pay cash... like the purchased of my dream car (55k) 3.5 years ago and now I have 14 months left. In the end you have to 'LIVE' and feel 'ALIVE'.
You can borrow money as long as it is way under your means.... NOT WITHIN or OVER but way under your means.
You can't live on RICE and BEANS forever.
I don't mean to be a pest, but if you have to borrow money to buy a car or something other then a house then you can't afford it. When you borrow the money to buy a 55k that shows me where your priorities are. My thinking is the same as Dave Ramsey's "live like no one else, so that later you can live like no one else". Meaning you sacrifice all of these toys and pay off all your debt and the mortgage and invest 15%, so that later you can invest gobbles of money above the 15% you can have millions when you retire and absolutely no debt and very little risk.[/quote]
Not a pest... no worries here. I too am a big fan of Dave Ramsey and believe in no debt but I call my method a hybrid  . I know in my heart I can probably have all my debt paid for in 2.5 years. Yes, the 1k is not entirely true, it's a lot more... I just want to hear the advise out there.
My approach is probably not close to the norm but I manage to pay all my debt and haven't paid a single cent of credit card interest in the last 15 years. I know at 55 my networth should be close to a million plus I also have about 70-75k of yearly pension plus with ZERO debt. I'm always thankful of my current situation.
Nways, I thank all the people that replied.
"Live way below your means and opportunities will come knocking"
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Wed Jul 13, 2011 7:59 pm |
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oldguy
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quote:
What happens to all of the debt that you have ammassed throughout the years when God forbid you pass away?
Well, I have one mortgage on a rental that lasts until I am age 94, I wonder if I'll make it? But as to what happens to the debt - my estate pays it. The executor sells the house, pays off the loan, and gives the remaining equity to our children.
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Wed Jul 13, 2011 8:18 pm |
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oldguy
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quote:
I know at 55 my networth should be close to a million plus I also have about 70-75k of yearly pension plus with ZERO debt.
You are leaning on that ZERO debt pretty hard. Keep in mind, your Net Worth is the important number, not your debt. NW = Assets minus Liability. Eg, $4M in assets minus $1M in debt = $3M. And $3M is way better that $1M with no debt.
But that $75,000 pension is your savior - you can live just fine even w/o a high NW.
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Wed Jul 13, 2011 8:28 pm |
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retire-early
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quote:
Originally posted by oldguy
quote:
I know at 55 my networth should be close to a million plus I also have about 70-75k of yearly pension plus with ZERO debt.
You are leaning on that ZERO debt pretty hard. Keep in mind, your Net Worth is the important number, not your debt. NW = Assets minus Liability. Eg, $4M in assets minus $1M in debt = $3M. And $3M is way better that $1M with no debt.
But that $75,000 pension is your savior - you can live just fine even w/o a high NW.
i understand the mathematics behind it oldguy but being debt free just feels so liberating.
"Live way below your means and opportunities will come knocking"
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Wed Jul 13, 2011 8:35 pm |
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