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02-16-2013, 06:02 PM | #1 |
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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, 06:21 PM | #3 |
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Message me your Nigerian bank account number please.
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02-16-2013, 06:23 PM | #4 |
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02-16-2013, 06:25 PM | #5 |
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Something's fishy here......but I can't put my finger on it......
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02-16-2013, 06:26 PM | #6 |
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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, 06:28 PM | #7 | |
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Quote:
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02-16-2013, 08:10 PM | #9 |
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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, 09:40 PM | #10 | |
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also, you should have cleared your LOC before buying an M3 DAT SILLY!
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02-17-2013, 01:31 AM | #11 |
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My loc is for the down payments for two rental properties, and an X5.
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02-17-2013, 11:59 AM | #13 |
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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, 06:55 PM | #14 |
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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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02-17-2013, 07:01 PM | #15 | |
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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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Life will take us to some interesting places, fortunately The ///M3 will too with a many of us know this very well, now my C6.3 AMG with 487 HP does it too ---> Click here for some good stuff I found Last edited by Mr. ///M3 RD; 02-17-2013 at 07:03 PM.. Reason: slight addition made |
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02-17-2013, 11:11 PM | #16 |
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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, 06:56 PM | #17 | |
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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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02-18-2013, 08:13 PM | #18 |
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Thanks for everyone's input. Still on the fence.
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