Author Topic: Refund ideas  (Read 1329 times)

M5

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Refund ideas
« on: February 13, 2018, 03:08:38 PM »
Looks like we will be getting a refund of roughly $1k this year on our taxes. I'm torn between paying extra on principle on our rental mortgage or simply throwing it into our investment funds.

I know leveraging money is always the smartest decision, but having the rental paid off a tiny bit quicker is also enticing. Paying on principal would shave about 11 months off the 30 year note.
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Mighty-Dollar

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Re: Refund ideas
« Reply #1 on: February 13, 2018, 03:14:06 PM »
What's the interest on that loan? You'd be making a bet that you'll do better by investing it. I wouldn't bet on more than about another 25% in stock market gains before pulling it out to use towards paying off the loan. This was a better bet back in 2009.

M5

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Re: Refund ideas
« Reply #2 on: February 13, 2018, 03:33:42 PM »
What's the interest on that loan? You'd be making a bet that you'll do better by investing it. I wouldn't bet on more than about another 25% in stock market gains before pulling it out to use towards paying off the loan. This was a better bet back in 2009.

3.75%. It was our first home that we bought for $0 down 4 years ago and currently have about 10% equity.
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swashbucklinstache

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Re: Refund ideas
« Reply #3 on: February 13, 2018, 04:43:49 PM »
PMI could change the decision significantly, if you have it.

More generally, it is 1 grand and you're saving it not spending it so do whatever is more fun :)
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M5

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Re: Refund ideas
« Reply #4 on: February 13, 2018, 05:27:42 PM »
PMI could change the decision significantly, if you have it.

More generally, it is 1 grand and you're saving it not spending it so do whatever is more fun :)

Forgot about PMI.. I think that makes the decision a little easier. At least NW increases either way!
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swashbucklinstache

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Re: Refund ideas
« Reply #5 on: February 13, 2018, 06:12:32 PM »
PMI could change the decision significantly, if you have it.

More generally, it is 1 grand and you're saving it not spending it so do whatever is more fun :)

Forgot about PMI.. I think that makes the decision a little easier. At least NW increases either way!

Good luck. I should say, do understand the risk/expected reward of each option and all the math etc., and don't make bigger money decisions based (solely) off of emotion. Having an IPS and being able to answer "I will deploy funds in accordance with my IPS" to this question every single time a spare dollar presents itself is the right answer. Regardless of what you do today I would encourage you to build this so you can use cold, hard math to answer these questions and weigh emotions appropriately when you're not in a place where you want to make an immediately available decision. Lots of threads here about paying off your mortgage early or not to weigh in against your personal risk tolerance.

But, your choice today is like: having an expected stash value of 1.205 million dollars or 1.208 million dollars in 10 years because of a one-off thing, so don't sweat it too much.
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M5

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Re: Refund ideas
« Reply #6 on: February 14, 2018, 09:10:10 AM »
PMI could change the decision significantly, if you have it.

More generally, it is 1 grand and you're saving it not spending it so do whatever is more fun :)

Forgot about PMI.. I think that makes the decision a little easier. At least NW increases either way!

Good luck. I should say, do understand the risk/expected reward of each option and all the math etc., and don't make bigger money decisions based (solely) off of emotion. Having an IPS and being able to answer "I will deploy funds in accordance with my IPS" to this question every single time a spare dollar presents itself is the right answer. Regardless of what you do today I would encourage you to build this so you can use cold, hard math to answer these questions and weigh emotions appropriately when you're not in a place where you want to make an immediately available decision. Lots of threads here about paying off your mortgage early or not to weigh in against your personal risk tolerance.

But, your choice today is like: having an expected stash value of 1.205 million dollars or 1.208 million dollars in 10 years because of a one-off thing, so don't sweat it too much.

Haha good point. I tend to get so invested in our finances that I over-think it most times. I need to come up with a plan to make my investing robotic. Thanks for the input!
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TheAnonOne

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Re: Refund ideas
« Reply #7 on: February 14, 2018, 02:06:47 PM »
I would just invest it.

We are getting a larger one around 4k and will just be putting it into the market...

Proud Foot

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Re: Refund ideas
« Reply #8 on: February 15, 2018, 02:01:48 PM »
We are going to be getting around $5k and will be putting it into our house down payment savings account.

ChpBstrd

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Re: Refund ideas
« Reply #9 on: February 16, 2018, 08:24:29 AM »
The right answer might be neither.

Are you in a career field where an additional credential could increase your earnings or improve your job security? If so, that application of $1k, plus many hours of study, would be your best bet.

M5

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Re: Refund ideas
« Reply #10 on: February 16, 2018, 09:18:46 AM »
The right answer might be neither.

Are you in a career field where an additional credential could increase your earnings or improve your job security? If so, that application of $1k, plus many hours of study, would be your best bet.

Negative. Plus I get tuition assistance, so no need to spend my own money on education.
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merlin7676

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Re: Refund ideas
« Reply #11 on: February 16, 2018, 11:56:54 AM »
Split it.
Knocks 5 1/2 months off your loan and still able to invest it.

ePalmtrees

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Re: Refund ideas
« Reply #12 on: February 16, 2018, 02:48:57 PM »
Wait, paying an extra 1000 knocks almost a year off your mortgage? That seems high to me! Could you explain the math?

M5

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Re: Refund ideas
« Reply #13 on: February 18, 2018, 07:47:40 PM »
Wait, paying an extra 1000 knocks almost a year off your mortgage? That seems high to me! Could you explain the math?

The original loan amount was $41,000. That's why 1000 knocks so much off. I don't have the amortization schedule in front of me at the moment, but I think we're already about 4 years ahead from paying extra when we actually lived there.
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