entrrt
New Poster
Cash: $ 0.45
Posts: 2
Joined: 23 Feb 2006
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| Payoff off HEL?? |
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Hello,
It's my first time here and first post! All opinions welcomed 
Anyway, my question is regarding our HELOC. Some background: my wife and I are both 36, 2 small children, own a home, secure careers(AGI~80K$), owe 17K$ on car(5.59% fixed), 186K$(30 yr.fixed mtg @6%), no CC debt. We also owe 19K$ on our HELOC(used for room addition) which is currently @8% variable. Should I begin paying off the HEL? We both have a roth we max out and both contribute (past the match) to our employer's 401K. Also, we have a 529(prepaid) plan for each of our kids(180$/month). Can I stop cancel the 529 plan and start it back up after the HEL is paid off. Our kids are only 1 and 3. Or would it make sense to stop the roth contributions and apply the money to the HEL. The HEL is only provides us w/ about a 1100$ tax deduction/yr. What would be the best financial decision?? Thank you!!
Brad
Oviedo, Fl
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Thu Feb 23, 2006 8:49 pm |
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coaster
Senior Advisor
Cash: $ 1358.20
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Joined: 11 Oct 2005
Location: Wisconsin
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Just off the top of my head, without running the numbers, I'd guess that suspending contributions to the 529 in order to pay off the HELOC would be a good move. The interest rate on it isn't terribly attractive, and it is variable, so no doubt it'll just get worse. When you get that paid off, then you might want to increase the 529 contributions in order to catch up.
~Tim~
Eye Candy : Why Whimsy
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Thu Feb 23, 2006 10:14 pm |
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entrrt
New Poster
Cash: $ 0.45
Posts: 2
Joined: 23 Feb 2006
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Thanks for the response Tim.
Suspending the 529 contributions would only free up 180$/month to put towards the HEL. Am I allowed to suspend my 529 plan temporaily(w/o fees/charges)?? I need to look into it.
Should I keep maxing out our Roths? If I lowered our 401k contributions back down to the match it would only free up an xtra 150$/month...but, then it would also raise our taxable income level.
Brad
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Fri Feb 24, 2006 12:38 am |
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coaster
Senior Advisor
Cash: $ 1358.20
Posts: 6687
Joined: 11 Oct 2005
Location: Wisconsin
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I suppose the Roths would be the next to consider, since there's no tax benefit right now. Hopefully some other members will post some more detailed analysis than I've been able to give so far; I'm running late this evening. Sorry. 
~Tim~
Eye Candy : Why Whimsy
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Fri Feb 24, 2006 1:22 am |
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Randyd
Member
Cash: $ 2.00
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Joined: 15 Aug 2005
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Most 529 plans have minimum contribution limits, so it would be best to check that out. I would change to the minumum on the 529 plan. Then i would look into other ways to save some money, Cut the cable down to basic, bring your lunch instead of eating out, skip the starbuck in the morning..ect. i was surprised how much i saved once i cut out all those things i thought i couldn't live without.. if you have nothing that you can cut back on and still want to pay off the HEL sooner then i would cut back the 401k to company match and after that look into cutting back on the roth.
http://www.cardratesonline.com
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Sat Feb 25, 2006 11:53 pm |
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