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MattL
Senior Member
Cash: $ 46.85
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Joined: 25 Jun 2005
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So with the tax you won't have enough to pay off the debt?
I would pay off credit cards and any other high interest debt. Refi your house for 15 years. Put 6 months of expenses away as someone suggested. After that I would dollar cost average it into a stock market index fund, assuming the money is long term.
$$$ Debt Elimination
Software | Computers | Electronics
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Sat Jun 25, 2005 8:53 pm |
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bong12187
Preferred Member
Cash: $ 24.50
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Joined: 31 Jul 2005
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I have a list in my head of priority spending. First, credit cards, then car loans. After that, we'll see how much there is left. I think there should be enough to pay those off but how much is available after that, who knows? But, thinking that I could pay my mortgage down to owe less than 80% value to lose the PMI and refinance since my credit should be outstanding with no other debt. Currently, my mortgage rate is 7%.
You came up with a good answer by yourself. If you can still work go ahead and refinance going down to 80% to drop the PMI and get a better rate. Pay off all credit cards and/or car payment. Buy a rental house (make sure you know what you are doing first). With passive income coming in, you should be able to get extra money coming in to supplement earned income later. Ensure that you have emergency fund as well. B
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Sat Aug 06, 2005 11:09 pm |
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steven77
New Member
Cash: $ 0.65
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Location: Oregon
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If you are not an experienced successful investor, then become as debt free as possible!
Take care,
Steven
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Wed Aug 31, 2005 3:11 pm |
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ushomeloans
Full Member
Cash: $ 10.55
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Joined: 08 Sep 2005
Location: Sacramento
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you know this is a fairly common question I hear, and almost always the do not pay off the mortgage.
Here is a calculator that will help you guesstimate what the actual rate is after tax savings.
http://www.finance.cch.com/sohoApplets/MortgageTaxes.asp
Now if you get matched in your 401k, Have 5 year cds that pay more, or if you have annuity that returns higher, dont do it.
Thanks,
Chris Kemp
US Home loans
chriskemp@us-homeloans.net
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Thu Sep 08, 2005 11:28 pm |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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quote:
Originally posted by steven77
If you are not an experienced successful investor, then become as debt free as possible!
This is the very reason most people cannot retire, or retire with very little, and have difficulties along the way. It is also why many of my peers cannot understand why I have so much YET STILL have a robust portfolio and good cash flow.
'Debt-free' does not equal 'responsible money-management'.
One does not have to be an 'experienced, successful investor' to take advantage of investing.
Debt-free gets you what? A big fat ZERO. (if that is what you want, though, then that's cool)
"Expect me when you see me."
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Thu Sep 08, 2005 11:54 pm |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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quote:
Originally posted by MattL
I would pay off credit cards and any other high interest debt.
Good idea.
quote:
Originally posted by MattL
Refi your house for 15 years.
BAD idea.
quote:
Originally posted by MattL
Put 6 months of expenses away as someone suggested.
Good idea.
quote:
Originally posted by MattL
After that I would dollar cost average it into a stock market index fund, assuming the money is long term.
Good idea, only delete the word "index".
quote:
Originally posted by bong12187
If you can still work go ahead and refinance going down to 80% to drop the PMI and get a better rate.
Top priority idea. 7% is high for a mortgage right now.
quote:
Originally posted by bong12187
Pay off all credit cards and/or car payment.
Credit cards: yes.
Car payment: maybe; it depends on your interest rate. My car loans give me no reason to pay them any sooner than necessary.
quote:
Originally posted by bong12187
Buy a rental house (make sure you know what you are doing first). With passive income coming in, you should be able to get extra money coming in to supplement earned income later. Ensure that you have emergency fund as well.
Capital idea. Involved, though, but research it. Not only passive income, but appreciation of the property.
quote:
Originally posted by KathMorgan
Pay off anything that has a higher interest rate then you could expect to make in short term investments.
Sans the words "short term" (why only short term, KM?), Kathy hit the nail on the head. That is THE measuring stick you use to answer your question.
"Expect me when you see me."
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Thu Sep 08, 2005 11:58 pm |
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patticaryl
Member
Cash: $ 2.10
Posts: 10
Joined: 18 May 2005
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Thanks so much everyone, for keeping the ideas going. Today's the day for getting some things settled....
Not as much money as I was hoping for, but I have 70,000. I am planning about 25k for taxes, leaving 45k to work with.
I have a car debt of 27k with a payment of 520 monthly, and misc cc debt, etc of 9k. Paying all those off gives me about a thousand a month less each month going out total expenses.
Now, I am figuring that paying those off will improve my credit greatly, and I will look at real estate loans for possible rental property for passive income.
I hate that I have those debts to waste the money on, and one thing I have learned is that cash is the way I want to go for now on, unless it is "good debt" that brings me something in return.
Thanks again.......and keep the advice coming!
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Mon Sep 12, 2005 1:34 pm |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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quote:
Originally posted by patticaryl
I have a car debt of 27k with a payment of 520 monthly, and misc cc debt, etc of 9k.
Now, I am figuring that paying those off will improve my credit greatly,
Credit debt, yes, car loan, no. The average age of your accounts impacts your credit rating...shorten the life of the car loan will work against you there. However, paying a high interest rate is not worth it; what is the interest rate?
quote:
Originally posted by patticaryl
cash is the way I want to go for now on, unless it is "good debt" that brings me something in return.
Exactly! There IS such a thing as good debt.
"Expect me when you see me."
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Tue Sep 13, 2005 4:44 am |
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hellobob
Member
Cash: $ 2.90
Posts: 11
Joined: 31 Jul 2005
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| Debt-free gets you what? A big fat ZERO. |
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I have to argue with that statment, I ve seen it in several posts. and just cause it gets repeated dosn't make it true.Debt-free gets you what? A big fat ZERO.
Do you take out a bank loan to buy stock in a company?
only if your into insane risks, its only ok for real estate cause you cant typically buy just $1k worth of your house, you need someone else to float a loan which allows you to live in, or rent a property, its only a deal because of the tax breaks and the fact that over all real estate appreciates something like 6% anually historically.
If your not into owning alot of rentals there is nothing wrong with owning your home outright. yes you dont get the tax break... but I would rather have the $15 grand cash than the $3k it saved me in taxes by giving it to a bank. that puts me $12 grand up every year , and, ... AND my home is still appreciating, growing in value every year just as your rentals are. If you have the cash you don't need OPM . and then when bubbles do burst ( and they do ) no ones knocking on my door, and even if they did... It' MY door 
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Wed Oct 26, 2005 5:03 am |
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kf4pwb
New Poster
Cash: $ 0.40
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Joined: 30 Oct 2005
Location: franklin, tn
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Here is what I come up with.
Assumptions: 20yr time line, 50k/yr investment income, 190k loan, 10% interest earned on investments, 5.25% charged on loan, 15 yr loan.
Scenario #1:
a. Keep house payment for full 15 yrs leaving you with 2636.67/month to invest at 10% for 15 yrs, cmpd'd monthly=$1,092,821.53 at the end of 15 yrs.
b. From year 15-20 you have the full 50k/year to invest ($4166.67/month)=$322,654.73
c. total of "a" and "b" at the end of 20 years=$1,415476
Scenario #2:
Put total 50k/year toward paying off the house and you will have it paid off in ~4 years. This leaves you investing 50k/year for 16 years=$1,960,153.13 at the end of the 20 years.
Note: I used above assumptions (50k/year investment, 10% interest on money invested, ect.) for easy math purposes. If you plug your numbers in the above example will hold true. Also, this is "personal" finance so only you know if you will actually invest your house payment after the house is paid off. This is just the pure math of it nothing more.
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Sun Oct 30, 2005 5:47 pm |
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Ultimate Cheapskate
Member
Cash: $ 3.65
Posts: 18
Joined: 27 Oct 2005
Location: Washington, DC area
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Obviously pay off highest interest debt first, but then DEFINTELY pay off/down your mortgage. I know this is contrary to the advice offered by many, but I think you'll find my reasons compelling. I'm a freelance writer and wrote an article a while back on the subject (Debunking the Mortgage Prepayment Myth - by Jeffrey Yeager) that can be found in the archives section of the free website DollarStretcher.com. Also, if you need a laugh during these tough times, visit my free website www.UltimateCheapskate.com
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Mon Oct 31, 2005 7:06 pm |
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