Invest or pay off... what do you guys think?

The Dude

The Dude

MuscleChemistry Registered Member
Silk and I are mid 30's. She has a pension and well... I may or may not... but retirement money aside... say you guys had like 100k in secured loans at abut 3% auto, house, property, whatever. You can afford your payments on your income, but it's TIGHT... and you get enough to pay off 50k. Do you pay them off or do you invest? Granted auto's are depreciating assets... well other than our trucks for some reason and property is normally appreciating but not always. I did some aggressive day trading back in the day and I was normally above a 10% ROR.. my issue is that I am going back to school. I may not land a job in the next few months or maybe I will... even investing that money comes with risk.. but paying off tangible property has much less risk as long as you secure it in trust.. which I will...
What do you guys think? I'd love to be down to nothing but the mortgage in the next two years which is a real possibility. That would also give us 80k in vehicle assets and another 30-40k for our place in TN. I will need to keep a mortgage on this property for tax reasons. Now that I own a home I can get creative in the write offs since I may be working from home for some portion of my time.
I would keep some money in savings for emergencies, but most would be in my Fidelity account. I'm trying to wrap my head around this as I feel like I'm being pulled in 10 directions.
 
Pay it off my wife sold 100 a acres of land she Inhearated and we paid off all cc home and car life is much better now
 
There is no reason to keep a mortgage for tax reason that I can think of. You pay more in interest that you can reduce for payments from your adjusted gross income ( this is one of those myths that have been repeated so many times, no one does the math and accept it as a fact, kinda remind you of the nutrition industry).

Always pay down all assets (depreciating are the worst) before investing.

http://www.thesimpledollar.com/the-myth-of-the-tax-deduction/
 
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would have to agree with Presser, you can't go wrong with paying off debt.
With that, i am a risk taker. With 3% interest on your loans and being investment savvy as you said you are. i dont see why you couldn't invest the money and earn a greater return than you are paying in interest. Selling puts are one of the safer more leveraged ways to do that in my opinion. have you ever dabbled in options?
 
First, make sure you have 6months expenses saved up as an emergency fund. Then pay off debt in reverse interest rate order (highest rates paid off first).

sent from a remote bunker while banging a Terminator Model T-X
 
Mountain_Man said:
Pay it off my wife sold 100 a acres of land she Inhearated and we paid off all cc home and car life is much better now
Click to expand...

My wifes dad sells off land every once in a while and usually splits the sale amount between my wife and her brother in annuities. He's got boo koo land leased out being farmed on now as well as the oil and gas monthly payments from resources being pulled from under it.
 
Options scare me... I just did basic day trading... I know Silk wants to pay everything off and despite the low rates I think that's the smart thing to do. Things are still kind of crazy, but they are better... I can see the benefits of paying stuff off and then having that freedom. I could always then put that money (savings) into the Fidelity account and do some trading, but I at least won't be taking as much risk. Paying off the mortgage probably isn't something I will go for Gung ho.. I can certainly earn a higher ROR than our rate.
What are your guys opinions on retirement accounts? I see the benefits of tax deferred interst, but some of those places won't let you take your money when you need it and when you do you pay an early withdrawal penalty. I'm thinking I am going to keep my money in my control. I think it's bullshit that the government and banks tell me when I can or can not use my own money.
 
Retirement accts are good for growth. If you want the flexibility to withdraw, look for one that will let you take a loan against yourself. You pay it back, butnyou are oaying yourself, not a bank.

Mortgages have tax benefits, so i wouldnoay that last.

sent from a remote bunker while banging a Terminator Model T-X
 
With regard to paying off mortgage vs investing: say your mortgage rate is 5%. If you can get a 7, 8 or maybe 10% return investing but you use all your available money paying off your mortgage, you've just lost 2, 3, 5% (investment return - mortgage rate). Plus the tax writeoff. So there's an opportunity cost associated with paying off the mortgage. This assumes, of course, that the mortgage is fixed rate and not an ARM or has a balloon payment or some such.

Regarding retirement accounts which are "liquid": check out a Roth IRA. Withdraws can be made from these if needed without penalty.
 
I was thinking like EMW14. Ultimately life has been chaotic for so many years that I think it's best for us to play the safe game. We just paid off our land in TN. We will hopefully be in a position to pay off both trucks at some point this year. Its going to be a rough year for me due to the surgery and subsequent recovery. Some good has to come of all of this and I wouldn't be able to sleep at night if I did not use the money responsibly.
We have some other things we were considering. One was buying a duplex as a rental property. Another was building a small cabin in TN for a place to vacation so we didn't need tents. We would need a well and septic installed though. I'm not sure what we would do about electric either since we are pretty far off of the beaten path. I wouldn't actually do any of that until I had a decent job and some security, but it's good to think about these things.
 
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