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| 02-16-2013, 07:02 PM | #1 |
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Bored at work....
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Responsible money advice-bankers wanted!
I'm getting back ~$15,000 from income tax.
 Now we all know refunds should be spent solely on our M's, BUT here's a "hypothetical" situation.  I have a Line of Credit currently @ 3.5%, and I have a rental property with a mortgage @ 3.09%. Do I throw the $ on the LOC or on the mortgage. My first thought is the LOC for the simple fact it has the higher interest rate (~$60,000). But, would the mortgage benefit in the long run by knocking that much off the principle (which is currently at ~$113,000) thus decreasing the length of the mortgage? 
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| 02-16-2013, 07:23 PM | #4 | |
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BimmerPost Supporting Vendor
 
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| 02-16-2013, 07:25 PM | #5 | |
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Bored at work....
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| 02-16-2013, 07:26 PM | #6 |
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BimmerPost Supporting Vendor
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Seriously though, without really getting into the details of the rent situation etc. Pay the LOC down. Your renters are paying off your mortgage and you are getting a tax deduction of the mortgage interest anyways. Use your refund to improve your personal situation
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| 02-16-2013, 07:28 PM | #7 | |
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Bored at work....
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| 02-16-2013, 09:10 PM | #9 |
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Lieutenant Colonel
 
Drives: 10 P TURBO + 12 750 + 09 E93 Join Date: Feb 2008
Location: Oakville, Ontario
Posts: 1,812
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Pay your mortgage debt. I own 2 investment properties and if theres one smart move I ever made, it was paying down what I owed on them.
Once you pay your debts down, your next problem becomes income tax and how to shelter yourself from it. |
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| 02-16-2013, 10:40 PM | #10 | |
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Second Lieutenant
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also, you should have cleared your LOC before buying an M3  DAT SILLY!
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| 02-17-2013, 12:59 PM | #13 |
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Second Lieutenant
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money management is something i really wished was gone over more thoroughly in high-school / university.
the tax rules change all the time and there is so much style and preference involved that it's nearly impossible to develop a strategy that you could really be confident as being 'the best' for ones application / needs / income. in the end it comes down to guessing and comfort zone. worst part is people also hate talking about it with other people. and then using good accountants and lawyers is soooooo expensive...
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| 02-17-2013, 07:55 PM | #14 |
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Major General
 
Drives: M3 Summer & C350 4MATIC Winter Join Date: May 2010
Location: GTA, Ontario - Canada
Posts: 7,602
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Garage List 2011 M3 Coupe e92 [3.00]
2011 Benz 350 4MATIC [1.00] 1969 Restored Merce ... [0.00] 1987 BMW 535is [0.50] Cars from the Past [1.50] The ///M3 Engine S65 [3.50] |
Make a spreadsheet, the result will show you to pay the loan down ... add the interest you save to your tax return and it will become a no brainer ... whatever you do don't send the moony to anyone here ... all have enough money otherwise they all would drive a Toyota
If you have the desire to help someone out ... I find the The Salvation Army the best
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Cheers, Rolf-Dieter
 Life will take us to some interesting places, fortunately The ///M3 will too with a many of us know this very well ---> Click here for some good stuff I found |
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| 02-17-2013, 08:01 PM | #15 | |
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Major General
Drives: M3 Summer & C350 4MATIC Winter Join Date: May 2010
Location: GTA, Ontario - Canada
Posts: 7,602
iTrader: (0)
Garage List 2011 M3 Coupe e92 [3.00]
2011 Benz 350 4MATIC [1.00] 1969 Restored Merce ... [0.00] 1987 BMW 535is [0.50] Cars from the Past [1.50] The ///M3 Engine S65 [3.50] |
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Once you find one ... you be thankful you did when you retire ... Good Luck! PS. Ask around your friends etc ... see what they do and then make a choice.
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Cheers, Rolf-Dieter
Life will take us to some interesting places, fortunately The ///M3 will too with a many of us know this very well ---> Click here for some good stuff I found Last edited by Mr. ///M3 RD; 02-17-2013 at 08:03 PM. Reason: slight addition made |
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| 02-18-2013, 12:11 AM | #16 |
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Grease Monkey
Drives: 2011 E90 M3,1994 Euro E36 M3/4 Join Date: Apr 2006
Location: Fort McMurray, Alberta, Canada
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Pay money down on the mortgage, 3.09% on $113,000 is a lot more interest per month than 3.5% on $60,000. Not to mention, everything you put into the mortgage is equity!!!
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| 02-18-2013, 07:56 PM | #17 | |
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Enlisted Member
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Joking aside, The prudent financial thing would be to pay down your LoC (best to reduce higher cost debt first, you're renters are paying for the cashflows, mortgage interest tax deductible and you'll still be able to draw on LOC in the future if for whatever reason you need the money again). That being said, if you're more concerned about cashflows, then you may want to consider putting it against the mortgage. Putting it against the LOC will save you $40/month in payments. Putting it against your mortgage will save you ~$70/month in payments since its applied to both prinicipal and interest (by my rough calcs, your current mortgage pmt is around $550/month). $30/month (and that's pre-tax) shouldn't be a make it or braek it amount so probably best to put it against the LoC. |
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