A horrible calculation, that I just did and potential decisions

[jmp470]

Greetings all.
This week I decided to do my DTI (debt to Income) calculation, which is 16%, then I did my back end calculation, which includes all expenses, minus entertainment comes to 21%. Both of these made me very happy, as it shows we are doing well (which we are now, after some setbacks).

However, I then decided to see how much interest I was paying versus my 16% of fixed bills. Our only debt is a house payment and pool payment. Needless to say, of that $, 40% is Interest.

To put it into context:
Income 15400 after taxes (this is the number I used)
Debt: House (3.5%) and Pool (5.25%): This includes all escrow: $2561
Bills: minus food, gas, entertainment: $3300

Interest is $1300 ish of the $2561. The truth of borrowing to buy a house!

So we are putting $5K per month towards the Pool payment and will pay it off over the next 12 - 18 months.

Things we are tempted to do: We owe $72500 ish on the Pool, and I’m tempted to take out enough 0% credit cards and put it on it. I think this would save us some money!

Has anyone done anything like that?

 

[Elzbieta]

Yes, you could do it on a 0% card and save money. Try finding a card that offers no more than a 2% transaction fee.

 

[The Cosmic Avenger]

We were offered 0% loans for much smaller projects, and we took it for a deck, which was roughly $5k (this was almost 20 years ago). It was 0% for a limited time, though, and we made sure we would be able to pay it off before that time, because this was one of those "gotcha!" loans where all the interest is just postponed, and will all come due if you miss a payment.

We actually had cash ready to pay for a car in 2017, but were offered 0% financing, so we decided to take it and use that cash to pay off the rest of our mortgage early. This 0% loan is not as tricky, so I'm really not worried about it.

Basically, check the terms on those 0% offers, and what the rate will be when it expires. It might work out to be more money if you can't pay it off soon enough.

Also consider, if you open up a few new credit cards and use most or all of the credit lines on them, your credit score will take a hit. You probably won't need to apply for a mortgage, but what about a car loan? If so, you might wind up paying a much higher rate.

 

[foxfirev5]

WADR I can not comprehend borrowing money to install a pool. My only advice with your income would be to pay it off ASAP. By cutting expenses I'm sure you could pay if off sooner than a bunch of gyrations with credit cards. However bear in mind I'm a simple plodder.

 

[Aerides]

Most 0% cards are limited time - after an intro period the 0 becomes a normal rate. Could you get approved for multiple 0% cards and then pay it off before they become full rate? If not, be honest about how long it would take, and then compare that to the 5.25 you have currently.

One little slip, like a day late on one payment, can also void your intro and jack up your rates. So if you do go that route, setup auto pays on any credit card to avoid the risk.

I tend to be risk averse, and would just pay it down as is, aggressively.

 

[stepford]

At least show us a picture of what kind of pool 100 grand will get you these days.

 

[euro]

At least show us a picture of what kind of pool 100 grand will get you these days.

My thoughts too..... better be one heck of a pool....

 

[CardsFan]

At least show us a picture of what kind of pool 100 grand will get you these days.

Maybe it was "only" a $75,000" pool, but still......

OP,
You are taking home about $185,000, after tax, you put in an expensive pool, you must own a house worth at least $500k (or the pool makes no sense), and NOW you are wondering why you are paying so much in interest? Really?

I don't mean to be mean )), but if the interest on the pool is causing a spending concern, you might want to look at ALL your spending.

Just My Humble Opinion.

 

[Big_Hitter]

must be one heck of a pool

 

[Big_Hitter]

WADR I can not comprehend borrowing money to install a pool.

have you ever lived in houston?

 

[foxfirev5]

have you ever lived in houston?

If borrowing money for a pool is what it takes I'm out.

 

[NW-Bound]

Not knowing what the cost of building a pool is now, I looked on the Web and found some examples. Prices seem to vary all over the place.

Following is a list of 93 real-world examples.

No.7 is an $85K pool in Maryland.

PS. Not all the pools were constructed recently! Some had the date as early as 1984. The listed costs are therefore not meaningful.

https://www.inyopools.com/Blog/how-much-does-a-pool-cost-90-real-world-examples/

 

[Big_Hitter]

If borrowing money for a pool is what it takes I'm out.

only if you can't pay cash and you are tired of sweating 24/7

 

[carnivalday]

Im putting in a pool in September. Cost will be around $48,000. Nothing special, 12 x 24, salt, solar heater, cage. My house is worth probably.....$250,000 without the pool. Will be worth every single penny, I plan on being in it every day (Im in Florida, where else).

 

[aja8888]

Friend's son who works for Dell in Austin, TX just put in a pool. Cost was $100K, of which a load of that was for blasting the rock.

I Houston, we have Beaumont clay and digging is easy. What's not easy is keeping the pool from floating up out of the clay.

 

[Ed_The_Gypsy]

A pool came with the house when we lived in Houston. We found that you could basically buy the same house with or without a pool for the same price. That was over 30 years ago.

 

[ivinsfan]

You didn't realize this before you borrowed for the pool

 

[brewer12345]

Holy crap! Can't imagine going into hock for that much for a pool.

 

[sengsational]

When I was a kid, we had a "pool man", and I was left with the impression that "pools suck". So to recap, all I did was watch the guy, and I was thinking "WTF"? Why bother?

 

[Gumby]

Two of my immediate neighbors removed their pools soon after they bought their houses. Too much work, too little benefit in this location. Liability exposure also drives up your insurance.

 

[RunningBum]

WADR I can not comprehend borrowing money to install a pool. My only advice with your income would be to pay it off ASAP. By cutting expenses I'm sure you could pay if off sooner than a bunch of gyrations with credit cards. However bear in mind I'm a simple plodder.

Yeah, but they aren't borrowing money to install a pool. The pool is already installed, now they are trying to figure out the best way to manage current debt.

I'd be afraid of something unexpected happening, like losing a job, that would endanger paying off the cards during the 0% period. Then all of a sudden the rate jumps to the nasty credit cards rates which still seem to be up around 18% in many cases. Not worth the risk to me.

Could you actually get enough of those credit cards to work anyway? I have great credit and I've been rejected on a couple of cards for having too much debt potential.

 

[Gumby]

I was into the credit arbitrage thing many years ago - making a balance transfer into a 0% card and earning the float for a year. In fact, I learned how to do it from this forum. At one time, I had over $75,000 in credit card debt going. However, the banks finally wised up and starting charging 3% per balance transfer, so it would be like refinancing to 3% APR from the 5.25% OP is currently paying. There is some financial benefit, but, as others have pointed out, there is also some danger in that approach; miss a payment by a day and your rate goes to the normal 18% or so.

 

[jmp470]

Thanks everyone for the replies! We decided to not do the CC’s, as it brings on to much risk, as some have pointed out. We are willing to pay the extra interest, for now.

As for posting pics, I would love to, but, cannot figure out how. The pool is a free form pool, with a Spa attached to it with a waterfall. Additionally, I have a swim Lane imbedded in the deeper end of the
Pool that We use almost daily. Moreover, the pool is heated for year round use (if we want) by an electric heat pump heater. Which does have its drawbacks.

With the same loan, I also installed Solar energy. So for a family of 5 with the pool heated our monthly electrical bill averages $80 per month. Of that $80, $20 of it is a connection fee to the grid.

We obviously knew the interest rate going into the
Project, but, I never did the calculations like I did above. It just shocked me, the 40% of my mandatory bills were interest.

Retirement attempt 2 (potentially)will be after the pool is paid off.

 

[Big_Hitter]

sounds like an awesome pool!

 

[The Cosmic Avenger]

As for posting pics, I would love to, but, cannot figure out how.

If you're using the "Quick Reply" on the bottom of the thread, click "Go Advanced".

You can upload photos using the control (large rectangular red highlight box) in the image below (although some bulletin boards require you have a certain number of posts first), or you can host the image at any third-party site and then use the Image button in the small red highlight box.