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Pay it off?
Old 12-15-2005, 04:15 PM   #1
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Pay it off?

I have a loan on the buisness I bought into 5 years ago. There is a balloon payment due in Aug of $139,000, I just received my yearly distribution check. I owe $164 on the loan, with this distribution check and a CD I have tucked away in another bank (so dh won't touch it) I can pay off this loan today. I'm inclinded to do that making us totally debt free with a nice chunk of change left over from the CD and distribution. I know Dh hates the thought of plunking down a hunk of money like that but I really want to be debt free. Once this is paid all we'd have is our monthly living expenses because I paid the mortgage off two years ago and we have no car payments. The money we were paying on that loan would go to retirment savings.

Is there any reason I shouldn't pay it off?
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Re: Pay it off?
Old 12-15-2005, 04:27 PM   #2
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Re: Pay it off?

You forgot to tell us the interest rate on the loan.
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Re: Pay it off?
Old 12-15-2005, 04:31 PM   #3
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Re: Pay it off?

Quote:
Originally Posted by retire@40
You forgot to tell us the interest rate on the loan.
With a balloon payment of $139K of the $164K due in eight months, the interest rate is probably less significant than the "sleep at night" rate. Especially if you think the money is likely to go AWOL.

Of course $164K invested at 4% APY for eight months is about $4300. How much is that nightime sleep worth?
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Re: Pay it off?
Old 12-15-2005, 04:31 PM   #4
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Re: Pay it off?

Out,

Its not nice to fool DH (esp. if he is involved in the biz). Some payoff considerations are:
possible tax implications
cash flow considerations
prepayment penalty

Otherwise go for it. Being debt free is a prime ER consideration.

Regards
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Re: Pay it off?
Old 12-15-2005, 06:38 PM   #5
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Re: Pay it off?

I've run the numbers and it makes sense to pay it off. Cash flow isn't a problem because the money that was going to the payment will just go to a retirement account. Dh knows the money is there but the fact that it's in a CD keeps him from thinking about it, I wouldn't actually "hide" it from him. There is no prepayment penalty, no tax implications just a monkey off my back. I just wanted to make sure there wasn't something I was missing.

Actually dh leaves all money matters to me, I talk to him about them and he gets that glazed look in his eyes.
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