Author Topic: Defeat the Net Debt  (Read 1963 times)

frugalecon

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Defeat the Net Debt
« on: July 28, 2018, 08:09:24 PM »
Goal: knock debts down below taxable.

Debts:

Mortgage (15 yr, 3.125%): $231,802.02

Auto loan (4 yr, 0%): $16,490.78

Total:$248,292.80

Taxable:

Brokerage: $103,776.36
Emerg Fund: $40,853.77

Total: $144,629.13

Net:($103,663.67)

Go!
« Last Edit: August 02, 2018, 03:13:39 AM by frugalecon »

tomorrowsomewherenew

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Re: Defeat the Delta
« Reply #1 on: July 29, 2018, 06:54:12 AM »
This one sounds interesting to me.

Taxable: $158,129.18
Mortgage & car debt: $233,840.26

Net: $-75,711.08

I'm interested to see how long this takes.

frugalecon

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Re: Defeat the Net Debt
« Reply #2 on: August 02, 2018, 03:15:40 AM »
Total Debt: $242,395.85

Total Taxable: $145,732.19

Net: ($96,663.66)
« Last Edit: September 03, 2018, 03:33:53 PM by frugalecon »

MrsWolfeRN

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Re: Defeat the Net Debt
« Reply #3 on: August 02, 2018, 03:28:14 AM »
Yikes, this one could take a while:
Mortgage: -216,524 (30 yr at 3.75%)
Taxable: 113,056
Net debt equals -103,468

boarder42

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Re: Defeat the Net Debt
« Reply #4 on: August 02, 2018, 04:36:31 AM »
I assume you're attacking this the most efficient way by funding the taxable account and not paying down the debt

talltexan

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Re: Defeat the Net Debt
« Reply #5 on: August 02, 2018, 07:48:59 AM »
Good luck lapping your debt, guys!


RWD

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Re: Defeat the Net Debt
« Reply #6 on: August 02, 2018, 08:31:06 AM »
Auto loan (4 yr, 0%): $16,490.78

Why the heck would you make extra payments on an interest-free loan? Even a simply savings account would be a better use of funds!

I have the same interest rate on my mortgage and I wouldn't recommend paying extra on that either. See the Investment Order post.

Edit: In re-reading the original post it seems you may be investing in taxable to get it above the sum of your debts. I approve of this method.
« Last Edit: August 02, 2018, 08:56:29 AM by RWD »

boarder42

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Re: Defeat the Net Debt
« Reply #7 on: August 02, 2018, 08:46:39 AM »
i'll join i plan to get there by investing not paying down my debt though its defeat the net debt right.

taxable is 55k

Mortgage is (339k)

net (284k)

frugalecon

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Re: Defeat the Net Debt
« Reply #8 on: August 02, 2018, 09:06:39 AM »
Auto loan (4 yr, 0%): $16,490.78

Why the heck would you make extra payments on an interest-free loan? Even a simply savings account would be a better use of funds!

I have the same interest rate on my mortgage and I wouldn't recommend paying extra on that either. See the Investment Order post.

Edit: In re-reading the original post it seems you may be investing in taxable to get it above the sum of your debts. I approve of this method.

Yes, I never said I was making extra payments on a zero percent car loan! When I bought the car I was planning to pay cash, but after negotiations were over the saleman said, "Hey, if you have good credit you could get a zero percent loan." When someone hands me hundreds of dollars for free, I generally take it.

I am not surprised boarder42 has weighed in. Part of the purpose of the thread is to highlight the value of working both sides of the ledger. But you still need to make scheduled debt payments!

boarder42

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Re: Defeat the Net Debt
« Reply #9 on: August 02, 2018, 09:07:35 AM »
Auto loan (4 yr, 0%): $16,490.78

Why the heck would you make extra payments on an interest-free loan? Even a simply savings account would be a better use of funds!

I have the same interest rate on my mortgage and I wouldn't recommend paying extra on that either. See the Investment Order post.

Edit: In re-reading the original post it seems you may be investing in taxable to get it above the sum of your debts. I approve of this method.

Yes, I never said I was making extra payments on a zero percent car loan! When I bought the car I was planning to pay cash, but after negotiations were over the saleman said, "Hey, if you have good credit you could get a zero percent loan." When someone hands me hundreds of dollars for free, I generally take it.

I am not surprised boarder42 has weighed in. Part of the purpose of the thread is to highlight the value of working both sides of the ledger. But you still need to make scheduled debt payments!

i dont think anyone here has advocated for defaulting on debt.

RWD

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Re: Defeat the Net Debt
« Reply #10 on: August 02, 2018, 09:10:53 AM »
Definitely a fun goal, I'll officially join too. Shouldn't take more than a year to be positive. In theory with normal market returns we could be positive in half a year.

Mortgage: $163k
Porsche: $42k

Total debt: $205k

Vanguard brokerage: $168k

Net: ($37k)

RWD

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Re: Defeat the Net Debt
« Reply #11 on: August 02, 2018, 09:14:10 AM »
Auto loan (4 yr, 0%): $16,490.78

Why the heck would you make extra payments on an interest-free loan? Even a simply savings account would be a better use of funds!

I have the same interest rate on my mortgage and I wouldn't recommend paying extra on that either. See the Investment Order post.

Edit: In re-reading the original post it seems you may be investing in taxable to get it above the sum of your debts. I approve of this method.

Yes, I never said I was making extra payments on a zero percent car loan! When I bought the car I was planning to pay cash, but after negotiations were over the saleman said, "Hey, if you have good credit you could get a zero percent loan." When someone hands me hundreds of dollars for free, I generally take it.

I am not surprised boarder42 has weighed in. Part of the purpose of the thread is to highlight the value of working both sides of the ledger. But you still need to make scheduled debt payments!

Thanks for the clarification and sorry for jumping to conclusions. Our car loan is at 1.69%, which is already practically free money!

Bird In Hand

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Re: Defeat the Net Debt
« Reply #12 on: August 02, 2018, 09:51:05 AM »
Almost all our savings is in tax-advantaged accounts, so our case isn't terribly interesting.

Mortgage: ~$64k
After-tax: ~$62k

Net: -$2k

frugalecon

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Re: Defeat the Net Debt
« Reply #13 on: August 02, 2018, 10:14:30 AM »
Almost all our savings is in tax-advantaged accounts, so our case isn't terribly interesting.

Mortgage: ~$64k
After-tax: ~$62k

Net: -$2k

Yes, the bulk of my assets are also in tax advantaged, but I posted this to track difference between debts and liquid assets that are readily available to service them. I sort of view the taxable portfolio as a "sinking fund" that could be used to retire debt, but until it exceeds the value of the debt, actually doing so would lead to a loss of liquidity and potentially greater investment returns. And once it does exceed...well, actually paying off the debt would lead to a loss of liquidity and potentially greater investment returns. In truth, I might just be a weirdo who likes to track things.

Bird In Hand

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Re: Defeat the Net Debt
« Reply #14 on: August 02, 2018, 10:34:46 AM »
In truth, I might just be a weirdo who likes to track things.

Yes, I think so.  :)

But even to those for whom (certain) debt is viewed as a tool to grow wealth, the presence of enough liquidity to...liquidate debt is probably a comfort -- a hedge against a change in circumstances that would make holding debt less desirable.

sisto

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Re: Defeat the Net Debt
« Reply #15 on: August 02, 2018, 10:47:16 AM »
This looks like a fun one to get in on. Most of my accounts are tax advantaged.

Mortgage $171,460
Auto 0%  $29,469
Total debt $200,930

Taxable $151,681

Net -$49,249

I suppose I could take my emergency fund and invest it in taxable and complete this challenge, but my wife likes the security of having the cash. I'm trying to convince her to at least move it to Ally so we lose less money from inflation. Still will be fun to try to work on investing more to taxable though.

talltexan

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Re: Defeat the Net Debt
« Reply #16 on: August 03, 2018, 08:55:12 AM »
Maybe I don't want to move the goal-post here, but I'm thinking you don't want balances to offset, you actually want cash flow. So you win this game when 4% of your net assets would be enough to keep your debts current for the year?

frugalecon

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Re: Defeat the Net Debt
« Reply #17 on: September 03, 2018, 03:35:26 PM »
Total Debt: $242,395.85

Total Taxable: $145,732.19

Net: ($96,663.66)

Whoops, meant to quote, not edit.

tomorrowsomewherenew

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Re: Defeat the Net Debt
« Reply #18 on: September 04, 2018, 12:59:30 PM »
7/29:

Taxable: $158,129.18
Mortgage & car debt: $233,840.26
Net: $-75,711.08

9/4:

Taxable: 165,312.77
Mortgage: 232,287.12 (Car is now paid off).
Net: $-66,974.35


RWD

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Re: Defeat the Net Debt
« Reply #19 on: September 05, 2018, 07:23:47 AM »
Mortgage: $162k
Porsche: $41k
Total debt: $203k

Vanguard brokerage: $167k

[9/4/2018] Net: ($36k)

[8/2/2018] Net: ($37k)

neo von retorch

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Re: Defeat the Net Debt
« Reply #20 on: September 05, 2018, 07:59:53 AM »
I've thought about this one before, especially as we get closer!

8/31/2018
Mortgage (366k) + CC (4k) = 370k (Don't worry, CC is paid off each month, but there is a "balance" on the last day of the month.)
Retirement (248k) + Taxable (54k) = 302k

NET: $68k

RWD

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Re: Defeat the Net Debt
« Reply #21 on: September 05, 2018, 08:14:51 AM »
(Don't worry, CC is paid off each month, but there is a "balance" on the last day of the month.)
I'm not including our credit cards because they are paid from checking/savings accounts and not from our invested brokerage account.

neo von retorch

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Re: Defeat the Net Debt
« Reply #22 on: September 05, 2018, 08:28:28 AM »
(Don't worry, CC is paid off each month, but there is a "balance" on the last day of the month.)
I'm not including our credit cards because they are paid from checking/savings accounts and not from our invested brokerage account.

Hmm - I'm confused. I pay my mortgage from my checking/savings account - can I discount that too ;)

Or, to re-word this. Assuming either I go crazy and decide all debt is bad, or I start living off investments, either way, I'll have to pay the mortgage and credit cards from my investments. But as long as I have (active) income streaming into my checking, that's paying both. So I don't understand your distinction.

I also just want to have enough in investments to cover "all" debt (obviously, at a point in time, with things improving forever after), so I just thought I'd be happier to have "all" that when I complete this challenge, rather than "almost" all that, but not counting some CC debt that happens to be sitting there.

RWD

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Re: Defeat the Net Debt
« Reply #23 on: September 05, 2018, 08:39:35 AM »
(Don't worry, CC is paid off each month, but there is a "balance" on the last day of the month.)
I'm not including our credit cards because they are paid from checking/savings accounts and not from our invested brokerage account.

Hmm - I'm confused. I pay my mortgage from my checking/savings account - can I discount that too ;)

Or, to re-word this. Assuming either I go crazy and decide all debt is bad, or I start living off investments, either way, I'll have to pay the mortgage and credit cards from my investments. But as long as I have (active) income streaming into my checking, that's paying both. So I don't understand your distinction.

I also just want to have enough in investments to cover "all" debt (obviously, at a point in time, with things improving forever after), so I just thought I'd be happier to have "all" that when I complete this challenge, rather than "almost" all that, but not counting some CC debt that happens to be sitting there.

Hmm, true. I guess I just view credit card balance as a temporary offset against checking/savings while the mortgage and car loan are ongoing (and actually costing interest). To be completely accurate you would want to include both credit cards and checking/savings in the calculation.

neo von retorch

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Re: Defeat the Net Debt
« Reply #24 on: September 05, 2018, 08:51:03 AM »
Yes, I mean - neither are "accurate" in the sense that "net worth" is probably more accurate. Even if you discount the primary residence, because you need a place to live, in my case, a rental property could be liquidated if I really wanted to (in which case, I'm net positive). My cash rises and falls in an almost quarterly fashion, because I pay estimated taxes. So, it's already ear-marked, and cannot be used for paying off my debts. I agree including my "temporary" CC debt isn't really "right" - but I just chose to do it for myself!

RWD

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Re: Defeat the Net Debt
« Reply #25 on: October 01, 2018, 07:58:47 PM »
Mortgage: $162k
Porsche: $40k
Total debt: $202k

Vanguard brokerage: $181k

[10/1/2018] Net: ($21k)
[9/4/2018] Net: ($36k)
[8/2/2018] Net: ($37k)

neo von retorch

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Re: Defeat the Net Debt
« Reply #26 on: October 02, 2018, 06:51:49 AM »
8/31/2018
Mortgage (366k) + CC (4k) = 370k (Don't worry, CC is paid off each month, but there is a "balance" on the last day of the month.)
Retirement (248k) + Taxable (54k) = 302k

NET: $68k

9/30/2018
Mortgages (364,740) + CC (4,749) = 369,489
Retirement (261,554   ) + tx (59,583) = 321,137

NET: $48,352 +20k!

SwordGuy

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Re: Defeat the Net Debt
« Reply #27 on: October 02, 2018, 02:41:45 PM »
This is a MUCH SAFER approach to killing mortgage debt than paying down the mortgage quickly.     Bravo to you all!

terrifictim

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Re: Defeat the Net Debt
« Reply #28 on: October 02, 2018, 04:16:56 PM »
Saw this thread from DPOYM Club and thought I would join as well for motivation:

10/1/18
Mortgage: 197,600
Taxable: 29,922
Net Taxable: 167,678
Retirement: 162,233
Net Retirement: 5,445

YevKassem

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Re: Defeat the Net Debt
« Reply #29 on: October 03, 2018, 10:15:54 AM »
Putting it in writing for motivation:

Taxable:  $35K
Mortgage:  $171K
Car:  $12K
Net:  $148K

tomorrowsomewherenew

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Re: Defeat the Net Debt
« Reply #30 on: October 04, 2018, 06:19:34 AM »
10/4:

Taxable: $172,841.58
Mortgage: 231,841.91
Net: $-59,000.33

9/4:

Taxable: 165,312.77
Mortgage: 232,287.12 (Car is now paid off).
Net: $-66,974.35

7/29:

Taxable: $158,129.18
Mortgage & car debt: $233,840.26
Net: $-75,711.08


Bird In Hand

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Re: Defeat the Net Debt
« Reply #31 on: October 04, 2018, 07:39:39 AM »
Mortgage: ~$64k
After-tax: ~$62k
Net: -$2k

Mortgage: ~$58k
After-tax: ~$61k
Net: $3k

Net Debt defeated, I guess?

DS

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Re: Defeat the Net Debt
« Reply #32 on: October 04, 2018, 07:58:50 AM »
Mortgage: ~$64k
After-tax: ~$62k
Net: -$2k

Mortgage: ~$58k
After-tax: ~$61k
Net: $3k

Net Debt defeated, I guess?

Time to get more debt! :P

Kierun

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Re: Defeat the Net Debt
« Reply #33 on: October 16, 2018, 02:35:53 PM »
This might be awhile...

As of today
Mortgage: ~400k
Mortgage: ~359k

Taxable: ~121k

Net: ~(638k)

SwordGuy

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Re: Defeat the Net Debt
« Reply #34 on: October 17, 2018, 10:02:42 PM »
This might be awhile...

As of today
Mortgage: ~400k
Mortgage: ~359k

Taxable: ~121k

Net: ~(638k)


One of these is an income producing property?  If so (and assuming it's making a profit including costs for future repairs and vacancies), I would ignore that mortgage for this calculation.

Focus on getting non-income producing debt gone.   The profit-making property will take care of itself.

Kierun

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Re: Defeat the Net Debt
« Reply #35 on: October 18, 2018, 10:34:13 AM »
You make a good point there SG, but I think I'd prefer to keep the investment property on the target list for the challenge of it. 

diapasoun

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Re: Defeat the Net Debt
« Reply #36 on: October 18, 2018, 11:06:48 AM »
I'm gonna sidle on in here as one of the little peanuts in this thread....

Taxable: $0
Debt: $28,396.63

I just got to the point this last year where I had a positive net worth, my EF fully funded, my car loan paid off, and my HSA and my 401k maxed. This next year, I'd like to max the HSA and 401k, start and max a Roth IRA, and (stretch goals!) start contributing to a taxable account. Doing that would be about half my take-home income.

frugalecon

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Re: Defeat the Net Debt
« Reply #37 on: October 19, 2018, 05:27:37 PM »
I'm gonna sidle on in here as one of the little peanuts in this thread....

Taxable: $0
Debt: $28,396.63

I just got to the point this last year where I had a positive net worth, my EF fully funded, my car loan paid off, and my HSA and my 401k maxed. This next year, I'd like to max the HSA and 401k, start and max a Roth IRA, and (stretch goals!) start contributing to a taxable account. Doing that would be about half my take-home income.

As the OP on this thread, I will just say that it sounds like you are doing a lot of things right, my friend.

diapasoun

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Re: Defeat the Net Debt
« Reply #38 on: October 20, 2018, 11:41:54 AM »
Thank you for the kind words. I figure that putting myself in a stretch goal like this thread is how I get to bigger peanut stage! ;)

simplyjay

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Re: Defeat the Net Debt
« Reply #39 on: October 21, 2018, 06:49:00 PM »
10-21-2018

Mortgage on triplex =$268,038.46

Goal= Debt Free and 1.5-2k Net cashflow from this property. i have 5 years to do this! let the race begin! cheers to everyone here!