Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 06-17-2017, 06:10 AM   #21
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,156
Quote:
Originally Posted by Texas Proud View Post
You do realize that the example given can be extended to infinity and still come out to 4% return

And even in your example, the loan has to be paid off after 10 years by some means.... so you calculations do not take that into account...
Yeah, I had a car dealership try this approach on me. It was like "you take an 8% loan with us instead of paying cash and at the end you're money ahead cause you still have your cash!!" I told him, "yeah, I still have my cash, but I DID have to pay off your loan from SOMETHING, so I'm NOT money ahead. There's that pesky 8% in there that also has to be paid." He tried to argue with me.

I think Scuba can play the game to her advantage and no, I don't know how to figure when to pay off the Heloc. But playing the game sounds like work to me and that's why I retired. I've admitted to leaving money on the table in lots of ways - not the least of which was retiring early. We all have to play it the way we see it. No "right or wrong" just what works for each of us. I'm betting there's a calculator for Scuba's question - but I'm retired.

Oh, and I'd love to see (well, DW would especially like to see) what a $90K (plus) remodel looks like! We've done a kitchen/bath remodel for about $24K and then a second kitchen/bath remodel for about $40K in another place. Both of these were in Hawaii with the "Paradise tax" included. So what do you get for $90K - enquiring minds (nosy folks ) want to know.
__________________

__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-17-2017, 06:37 AM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 15,197
Quote:
Originally Posted by Scuba View Post
I'm not concerned about debt hanging over my head when I can easily pay it off anytime. I'm interested in others' thoughts about how high rates need to go before they would take cash out of the market to eliminate debt. Thanks for your perspectives on this.
In theory, you would pay it off when the HELOC interest rate exceeds your expected rate of return on the investments. I think I would probably set up an autopay to pay $x per month towards the HELOC until it is paid off... I have a 3.375% 15-year mortgage from a cash out refinance just before I retired and I have the monthly payments on autopay. Since I took out that loan, the earnings rate on my portfolio has far exceeded 3.375%.
__________________

__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
pb4uski is offline   Reply With Quote
Old 06-17-2017, 08:31 AM   #23
Thinks s/he gets paid by the post
Fedup's Avatar
 
Join Date: Mar 2014
Location: Southern Cal
Posts: 2,930
I've had auto loan less than 1% and I paid it off. If it's just $90k, why bother. If it's a small amount does it make all that difference?
__________________
Fedup is offline   Reply With Quote
Old 06-17-2017, 09:28 AM   #24
Recycles dryer sheets
 
Join Date: May 2016
Location: Orange County Ca
Posts: 98
From just a personal comfort level I'd pay it off it headed anywhere north of 5%. For the most part, the period I've had HELOCS, it's been better to have the money invested elsewhere versus paying it off quickly. With the markets pretty high it may be a good time to use some of your winnings to pay it off.
__________________
SpinDr is offline   Reply With Quote
Old 06-17-2017, 09:39 AM   #25
Full time employment: Posting here.
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 531
I kind of smile at some of these discussions where a person is planning on future investment returns beating a short-term, fixed, interest rate. I just ran across an amusing quotation:

But in all my experience, I have never been in any accident of any sort worth speaking about. I have seen but one vessel in distress in all my years at sea. I never saw a wreck and never have been wrecked nor was I ever in any predicament that threatened to end in disaster of any sort. (E. J. Smith, 1907, Captain, RMS Titanic)
__________________
OldShooter is offline   Reply With Quote
Old 06-17-2017, 09:55 AM   #26
Thinks s/he gets paid by the post
Fedup's Avatar
 
Join Date: Mar 2014
Location: Southern Cal
Posts: 2,930
If this is a small amount like $100k vs $1 million portfolio for example. 2-5% you earn over the HELOC rate is spread out of the portfolio of $ 1 million, which is like .2-.5%. It works out to be less than money in MM.
__________________
Fedup is offline   Reply With Quote
Old 06-17-2017, 10:54 AM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 12,756
I never really answered the question, so I will...


I would pay it off when the cost of the loan is out of whack with what I can earn on my investment with the cash.... not what I can earn in stocks, but in a 'safe' investment...

I would also take into account my cash balance vs total investments as I would not want to deplete my cash and then have to sell stocks...

And another consideration is how much was borrowed.... I would think hard if I had to pay off $100,000 or more, but not much if less than $10,000....


So, the answer to your question is.... it depends....
__________________
Texas Proud is offline   Reply With Quote
Old 06-17-2017, 11:10 AM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 15,197
Quote:
Originally Posted by OldShooter View Post
I kind of smile at some of these discussions where a person is planning on future investment returns beating a short-term, fixed, interest rate. I just ran across an amusing quotation:

But in all my experience, I have never been in any accident of any sort worth speaking about. I have seen but one vessel in distress in all my years at sea. I never saw a wreck and never have been wrecked nor was I ever in any predicament that threatened to end in disaster of any sort. (E. J. Smith, 1907, Captain, RMS Titanic)
I don't see where the quote is very relevant to the discussion. Given the theoretical construct of rates of return, investment returns are likely to exceed short term interest rates over almost any 3-5 year periods.

I am an averages player. I believe that is it most likely that my 60/40 portfolio will return more than my 3.375% mortgage and 1.9% car loan. If my pofolio return is less than 4% in then having the two loans will be the least of my worries. These loans total about 7% of my portfolio so if this little play goes sideways then there is no risk of ruin.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
pb4uski is offline   Reply With Quote
Old 06-17-2017, 11:19 AM   #29
Thinks s/he gets paid by the post
 
Join Date: Feb 2008
Location: Indialantic FL
Posts: 1,178
I have a small balance on a HELOC I could pay it off but letting it ride through peak spending months.
__________________
JimnJana
"The four most dangerous words in investing are 'This time it's different.'" - Sir John Templeton
jimnjana is offline   Reply With Quote
Old 06-17-2017, 03:04 PM   #30
Full time employment: Posting here.
 
Join Date: Jun 2016
Posts: 815
Quote:
Originally Posted by Koolau View Post
Yeah, I had a car dealership try this approach on me. It was like "you take an 8% loan with us instead of paying cash and at the end you're money ahead cause you still have your cash!!" I told him, "yeah, I still have my cash, but I DID have to pay off your loan from SOMETHING, so I'm NOT money ahead. There's that pesky 8% in there that also has to be paid." He tried to argue with me.



I think Scuba can play the game to her advantage and no, I don't know how to figure when to pay off the Heloc. But playing the game sounds like work to me and that's why I retired. I've admitted to leaving money on the table in lots of ways - not the least of which was retiring early. We all have to play it the way we see it. No "right or wrong" just what works for each of us. I'm betting there's a calculator for Scuba's question - but I'm retired.



Oh, and I'd love to see (well, DW would especially like to see) what a $90K (plus) remodel looks like! We've done a kitchen/bath remodel for about $24K and then a second kitchen/bath remodel for about $40K in another place. Both of these were in Hawaii with the "Paradise tax" included. So what do you get for $90K - enquiring minds (nosy folks ) want to know.


Completely gutted and redid inside of 3 BR, 2 BA condo. New flooring throughout, changed ceiling height and a couple of walls (limited flexibility on this in a condo), new lighting throughout, new fireplace, new appliances, new cabinets, new countertops, new high end tile and plumbing fixtures in bathrooms, added steam shower, new window coverings, new bar with custom glass, new furniture throughout, new rug, new artwork. Got rid of texture and bullnose corners on drywall and repainted throughout. New interior doors & hardware. I'm sure I'm leaving some things out but it was a very expensive remodel. Decided we were keeping the place as our long-term primary residence so we spent whatever it took to create the environment we wanted, vs what the builder had put in 10 years earlier. This is in So CA so probably not as pricey as Hawaii but definitely not middle America pricing.
__________________
Scuba is offline   Reply With Quote
Old 06-17-2017, 08:15 PM   #31
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,156
Quote:
Originally Posted by Scuba View Post
Completely gutted and redid inside of 3 BR, 2 BA condo. New flooring throughout, changed ceiling height and a couple of walls (limited flexibility on this in a condo), new lighting throughout, new fireplace, new appliances, new cabinets, new countertops, new high end tile and plumbing fixtures in bathrooms, added steam shower, new window coverings, new bar with custom glass, new furniture throughout, new rug, new artwork. Got rid of texture and bullnose corners on drywall and repainted throughout. New interior doors & hardware. I'm sure I'm leaving some things out but it was a very expensive remodel. Decided we were keeping the place as our long-term primary residence so we spent whatever it took to create the environment we wanted, vs what the builder had put in 10 years earlier. This is in So CA so probably not as pricey as Hawaii but definitely not middle America pricing.
Thanks for the update. DW was impressed (and just a little bit jealous, heh, heh.) Enjoy!

Full disclosure on our remodel(s): We did almost all of the tear-out work. Then we did stuff like painting and other cosmetic stuff we were capable of. Additionally, we used some lower-cost help for the mid-level work. We paid as little as $20/hour for a handy "man" and $65 for a kitchen/bath "expert" and $110/hour (electrician).
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 06-17-2017, 08:40 PM   #32
Full time employment: Posting here.
 
Join Date: Jun 2016
Posts: 815
Thanks Koolau! We do love how it turned out, but it was a long and sometimes painful process. We hired a GC due to scope of work, plus we didn't have the interest or time or skill to DIY anything other than design & selection of materials. It also had to be permitted through the City and the HOA had to approve structural and plumbing changes. Too much for us to handle ourselves.
__________________

__________________
Scuba is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Pay off or not to pay off? brownred FIRE and Money 16 03-13-2017 05:28 PM
Pay off mortgage with HELOC CBR900RR FIRE and Money 9 04-28-2014 01:19 PM
What would you do - pay off student loan or pay down mortgage? bank5 FIRE and Money 27 07-27-2009 05:30 PM
Pay off mortgage with HELOC? nanannjen FIRE and Money 16 12-21-2008 08:57 AM
HELOC to pay off 2nd home? want2wander FIRE and Money 7 07-20-2008 04:24 PM

 

 
All times are GMT -6. The time now is 09:07 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.