Author Topic: Looking for a little advice  (Read 1884 times)

fisherman

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Looking for a little advice
« on: June 03, 2014, 10:35:49 PM »
My wife and I are a little torn. 

We made good money for the last few years.  Saved a good deal of it.  We recently decided to slow things down a little for more family time, and cut out a good portion of our income.  I now have an income of 40k for 3 months of work. Wife stays home with the kiddos.  Not sure what the other 9 months will bring in for me. 

We have a house we bought for 270k, and took out a loan for 215k.  Paid it down the last few years to 190k. We have no other debt, the house is in very good repair, and we are not anticipating any big expenses soon.   We have a monthly payment of approx $1300, including taxes and insurance. We are locked into a 3.85% 30yr rate.   A $1300 mortgage payment makes us a bit nervous, but we love our house, and it's appreciating yearly in a small town in Alaska.  So, this is the dilemma we are having.  We can sell some commercial fishing permits that could potential appreciate and use a bunch of our cash and make approx a 120k payment on the house, refinance it, and end up with about a $600 monthly mortgage payment at 4.5%. (stretch it back out again)  We don't have enough to pay the entire house off, but we are frugal and savers, so we'd work hard at getting it paid off.  But, that would mean giving up a great deal of cash and assets that we could potentially put to work.   

What would you do?  We go back and forth.  On one hand, we'd love to live in hour house for $600 a month.  On the other hand, it's tough to give up the cash/assets. 

totoro

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Re: Looking for a little advice
« Reply #1 on: June 03, 2014, 10:42:27 PM »
What is the likely rate of appreciation on the fishing permits?  Would the lack of the permits affect your income?

fisherman

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Re: Looking for a little advice
« Reply #2 on: June 03, 2014, 10:45:51 PM »
Hard to say how much they'll appreciate.  They've gone up around 8% a year since I've bought them, averaged out.  No, they won't effect my current income, as I'm doing something else now.

totoro

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Re: Looking for a little advice
« Reply #3 on: June 03, 2014, 11:05:31 PM »
Sounds like they have a higher return than your interest rate.  I'd keep them.  As attractive as lowering your payment is, the licenses are better return if you are not fi and are trying to get there.  Earning a bit more income in your 9 months off might be a better move. 

rmendpara

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Re: Looking for a little advice
« Reply #4 on: June 04, 2014, 12:16:17 AM »
Not to be the Debbie Downer, but I don't think you made a good decision on buying the house and now living on a household income of 40k (is this gross?) that is not stable.

At $1,300/mo, that's just your base cost. You could sell off some assets, but you're really just exchanging those assets for home equity... not a smart trade considering you are "earning" 3.5% on the transferred assets one time, and then zero going forward.

Do you plan on resuming a higher-paying job in a few years, or potentially downsizing your home?

former player

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Re: Looking for a little advice
« Reply #5 on: June 04, 2014, 01:04:17 AM »
Can you lease/licence the fishing permits rather than sell them?  That way you would keep the asset but still get income. Silly to have them sitting there if you are not using them, but also silly to lose the capital value if you don't have to.

If you can't live on $40,000 a year, you have reduced your workload to mustachian levels without reducing your expenses to mustachian levels, so that is something else you might look at.