Author Topic: Defeat the Net Debt  (Read 652 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: $246,231.92

Total Taxable: $145,223.65

Net: ($101,008.27)

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?