Author Topic: removed  (Read 2261 times)

semiretired

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removed
« on: July 06, 2017, 08:18:09 PM »
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« Last Edit: July 07, 2017, 06:53:53 PM by semiretired »

kayvent

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Re: Yes, another pay off debt or invest ?
« Reply #1 on: July 06, 2017, 08:24:43 PM »
Sell your truck. /answer

kayvent

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Re: Yes, another pay off debt or invest ?
« Reply #2 on: July 06, 2017, 08:28:00 PM »
And sell your atv. If I met you in person, I'd have a different tenor but we are on the MMM forums and I must respect the house etiquette. Unless you are a millionaire, having 30K in automobile debt is crazy. And if you were a millionaire, you should have paid cash and gotten a large discount.

If they two things are worth more than your debt on them, selling them and getting cheaper ones (even on a loan) is a better use of your money.1 If you shaved 20K off of the debt total you'd save the 3% interest and be able to invest/save/use the 20K you'd have otherwise put on the loan.

1 This all assumes that you aren't that rare snowflake that makes money off of a very expensive truck and atv.
« Last Edit: July 06, 2017, 08:33:46 PM by kayvent »

doggyfizzle

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Re: Yes, another pay off debt or invest ?
« Reply #3 on: July 06, 2017, 08:59:15 PM »
So my question is, is there a calculator that i can use to figure out what i would need to make interest wise that i could play with that will compensate for my debt interest as well as income taxes on the investment interest.

You can generate an amortization schedule in excel using the original loan amounts, duration, and interest rates for each (truck and atv) loan by month and then match where you are in your payment schedule to see how much interest/principal you have remaining on the balances.  Do some digging for decent savings/checking APRs and remember interest will be taxed at your ordinary rate to figure out how much interest you stand to collect over the remaining balance of your loans.

I've never had a car payment before, so someone with more experience might be able to tell you whether the interest/principal is paid like a mortgage (like what I'd expect), or if it is split equally through the progression of the loan.

frugaliknowit

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Re: Yes, another pay off debt or invest ?
« Reply #4 on: July 07, 2017, 08:00:11 AM »
There is no better risk free return than getting rid of those loans.  You can waste your time analyzing it to death.  Be smart and flush the toxic debt.  Tough hug...:)

Aggie1999

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Re: Yes, another pay off debt or invest ?
« Reply #5 on: July 07, 2017, 08:25:13 AM »
+1 on getting rid of those loans. Unless you use both for a business/making money there is no logical reason to be in that type of debt. Truck loan is bad enough but $10k in debt for an ATV? Damn.

specialkayme

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Re: Yes, another pay off debt or invest ?
« Reply #6 on: July 07, 2017, 02:50:54 PM »
Well the truck is a 2014 model that i bought used with 14k miles for 25k (sticker new was 42k) so i already let someone else take the 40% hit. As far as the atv loan it is for 2 atv's, mine and the wifes. Also purchased used for $11k, new they are about 18k so again i already let someone else take the hit in the beginning.

You didn't let anyone else take the hit for you. You took the hit. The items you bought had "equity" in them, but you still paid (and are paying) for them. Whenever you hear someone say "but I saved $X by spending $Y" it usually means they just spent $Y.

It sounds like you're trying to justify your purchases to us. To which, I don't think you need to do. If you need to justify it to yourself, I think you have the answer. If you don't need to justify it to yourself, don't bother explaining it to us. You have nothing to prove to us.

If it were me, I wouldn't own that stuff. I see plenty of clients that "have to have" the ATV. Usually they are people in financial distress (not saying you're one, just that there is a odd correlation between ATV owners and financially distressed people, for whatever reason that is). And if you have loans against them, that's bad news bears to me. It can blow up or break at any time. If I had to have an ATV, I'd get a cheap used one and pay cash. But that's me. I also don't need a $42k truck to haul ATVs around in. I have a truck for my side business, and it's a 2003 Ranger with 179k miles on it. Drives great. Paid for. Hauls my trailers just fine. If you're so good at flipping cars and trucks, flip YOUR truck.

That being said, assuming you don't want to hear about getting rid of the truck or the ATVs, I'm not a fan of getting rid of car loans like most people on here. They are very low interest loans, so by investing the money you are beating the market. I wouldn't have a problem putting your cash into something a little more illiquid, like stocks. 7% after inflation returns is tough to say no to. Or you can get stocks that return 5% dividends pretty easy. Might take a week to get the money out though. Or you could go with betterment, which would take you about 3 days to get the money out (I think).

If you aren't ok with either of those, think about what you're losing by holding onto that cash and "waiting for the deal." By my estimate, assuming $33k in debt at 3%, that's (roughly) $990 in a year (less, as you'repaying it down, but you get the idea). Plus, you miss out on investing that $33k in cash (lost opportunity of 7% after inflation market average [18% YTD currently]), or about $2,310 in earnings. Plus, that cash is depreciating in value from inflation. At about 3% per year, or another $990. So, if you have $33k in debt and $33k in cash, you're losing $1,980 per year AND missing out on an opportunity to make another $2,310, or $4,290 total "loss."

So, you can:
a. Keep the debt and keep the cash. Your $33k in cash will be "worth" $31,020 in a year. Or almost a $2k loss.
b. Keep the debt and invest the cash. Your $33k would be "worth" about $34,320. Or almost a $1,300 gain.
c. Lose the debt. You'll be about the same as you are now.

Whichever you feel more comfortable with. If you think you can do better than $4,300 in the next year by holding onto the cash and waiting for a deal, roll the dice and live a happy life. If not, invest and start worrying about something else.

v8rx7guy

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Re: Yes, another pay off debt or invest ?
« Reply #7 on: July 07, 2017, 03:25:12 PM »
Nevermind, all i asked for is a calculator to help me make a decision. I did not ask anyone if i should sell my truck or atv's.
I thought this site was about helping people with their questions, not "this is what i would do"
Mods you can close this thread as i will be logging off to never to log back on again.
I will just go back to reading all the MMM blog posts and use what i can and ignore the rest.
Thanks or nothing.

Check this one out:

http://www.mrmoneymustache.com/2015/04/28/what-does-your-work-truck-say-about-you/

Cromacster

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Re: Yes, another pay off debt or invest ?
« Reply #8 on: July 07, 2017, 03:33:43 PM »
Maybe when a new person starts a thread like this it should come with a complimentary cold compress.

It's tough around here, these are the mustache forums.  MMM tosses around terms like facepunch and calls a majority of truck owners dumbasses, or atleast that they look like one.

This place is great for alot of information, but if you come in saying you have a truck and atv's, both with loans on them, you're going to get some flak.


Aggie1999

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Re: removed
« Reply #9 on: July 10, 2017, 09:41:05 AM »
Yep, that's some butt hurt right there. Reminds me of friends/coworkers that trade in a car loan for another more expensive car. When critiqued on their decision they justify it by saying their monthly payment is the same as the old car. Doesn't seem to compute that they added 5 years to their loan.