Defeat the Net Debt

[Bird In Hand]

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

Net Debt defeated, I guess?

Mortgage: ~$51k
After-tax: ~$48k
Net: -$3k

Back in the red.  Shifted some after-tax to Roth near the end of the year, had some holiday spending, and of course the markets weren't very helpful.  We might try to fund Roth early this year, so we could be in the red for a while longer.

[Rimu05]

Joining this as I plan to spend the next two years tackling my debt and not saving money. I really regret not tackling my debt sooner so here we go

Car loan - 4022
Student loan - 26,798.05

Total = -30,820.05

Plan - Pay of car first so I can have the extra cash flow. I finally realized why people do the debt snow ball. That extra 323 a month that I will get from paying my car can be thrown at the student loan.

Goal - Debt free by 24 months.

Hope: Income increases. Not having a high income sucks although I am taking steps to increase my income.

[Mississippi Mudstache]

This seems like as good a New Year's Resolution as any, so sure, I'm in. I'll try to get to zero net debt (including only investments, excluding cash and home equity) by year's end.

Loans
Mortgage: $236K
Auto: $6.5K

Investments
$200K

Difference
$43K

By the end of this year, my mortgage will be down to $226K and my auto loan down to $3.8K, which means I need to increase my investment accounts by $29.3K to cover the difference. I'm already set up to invest $26.4 in my 401K automatically, which calls for only $3K in my IRAs assuming 0% investment returns. Eminently achievable. Of course, if the market keeps heading south, I'll have to invest more aggressively to make up the difference.

[RWD]

Joining this as I plan to spend the next two years tackling my debt and not saving money. I really regret not tackling my debt sooner so here we go

Car loan - 4022
Student loan - 26,798.05

Total = -30,820.05

Plan - Pay of car first so I can have the extra cash flow. I finally realized why people do the debt snow ball. That extra 323 a month that I will get from paying my car can be thrown at the student loan.

Goal - Debt free by 24 months.

Hope: Income increases. Not having a high income sucks although I am taking steps to increase my income.

I think you misunderstood the purpose of this thread. It's about having more in investments than total debt, not about eliminating debt (at least not directly), and you didn't list any investment balances at all. Depending on the interest rates of your car and student loans it may make more sense to invest instead (see investment order post).

[RWD]

Mortgage: $159k
Porsche: $37k
Total debt: $196k

Vanguard brokerage: $165k

[1/4/2019] Net: ($31k)
[12/4/2018] Net: ($28k)
[11/1/2018] Net: ($31k)
[10/1/2018] Net: ($21k)
[9/4/2018] Net: ($36k)
[8/2/2018] Net: ($37k)

Hmm, not quite the right direction last month...

[talltexan]

If your goal was to improve your "net debt" position over 2018q4 (in which the SP500 was down 13%), then--yes--paying down your debt was actually the way to do that.

If only someone could have told us in advance about that market decline.

[RWD]

If your goal was to improve your "net debt" position over 2018q4 (in which the SP500 was down 13%), then--yes--paying down your debt was actually the way to do that.

If only someone could have told us in advance about that market decline.

Yep, I missed the memo. I thought for sure following the Top is in thread would let me know when to sell!

[talltexan]

The Top Is In thread has correctly predicted 9 out of the last 4 market pullbacks.

[frugalecon]

If your goal was to improve your "net debt" position over 2018q4 (in which the SP500 was down 13%), then--yes--paying down your debt was actually the way to do that.

If only someone could have told us in advance about that market decline.

Yep, I missed the memo. I thought for sure following the Top is in thread would let me know when to sell!

Yoda once said, “The Road of Net Debt a straight line is not, Padawan.”

[Kierun]

Mortgage: ~396k
Mortgage: ~358k

Taxable: ~117k

Net: ~(637k)

Mortgage: ~395k
Mortgage: ~357k

Taxable: ~110k

Net: ~(642k)  :(

[sisto]

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.

Seems like a good time for an update

Mortgage $165K
Auto 0%  $26.35K
Total        $191.35K

Taxable    $174K

Net         -$17.35K

Not too bad, closing the gap nicely considering the market was terrible for a bit there and I'm still down YOY.

[diapasoun]

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.

Well, taxable is still $0; that hasn't changed. :) That being said, HSA and 401k are on track to max for this year, and I've been plonking money into rebuilding my EF after some heavy end-of-life vet bills. I'm seriously hoping I'll be able to plonk at least a little bit into a Roth + taxable accounts this year as well -- we'll see!

Tax-advantaged: 42k
Cash: 15k
Debt: 27k

[sisto]

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.

Depending on what the debt you hold is, IE interest rate etc., you may want to pay it down before investing in a taxable account. Otherwise, seems like you have a solid plan going and congrats on improving your situation.
Well, taxable is still $0; that hasn't changed. :) That being said, HSA and 401k are on track to max for this year, and I've been plonking money into rebuilding my EF after some heavy end-of-life vet bills. I'm seriously hoping I'll be able to plonk at least a little bit into a Roth + taxable accounts this year as well -- we'll see!

Tax-advantaged: 42k
Cash: 15k
Debt: 27k

[diapasoun]

@sisto My debt is student loan debt and overall is low-interest; there are a few individual loans that are 6.8%. I pay a little bit extra monthly on those loans already, and if I have extra leftover after filling out tax-advantaged accounts, there's a strong likelihood I'll split that money between taxable investments and the particular loans that are close in interest to a 7% expected return.

[therethere]

Why not refinance that 6.8% debt lower first? At nearly 7% I would consider paying it off or down before adding to a brokerage account. I used 5% as my threshold for loan paydown as 7% is even with average expected returns.

Get some quotes for refinancing. Earnest gave me good rates once I had some money in my retirement accounts. I would think almost anywhere would beat 6.8% unless you need it on some type of IBR plan.

[diapasoun]

Why not refinance that 6.8% debt lower first? At nearly 7% I would consider paying it off or down before adding to a brokerage account. I used 5% as my threshold for loan paydown as 7% is even with average expected returns.

Get some quotes for refinancing. Earnest gave me good rates once I had some money in my retirement accounts. I would think almost anywhere would beat 6.8% unless you need it on some type of IBR plan.

I haven't refinanced so far because for many years, my overall loan rate was low enough that consolidation+refinancing (especially when I didn't have stable employment) wasn't worth it; I've never been on an IBR but when I was working the unstable contracting life, I wanted it available. Overall low rate that would be hard to lower + wanting IBR availability made it not the best option.

That being said, I'm currently in a pretty stable job and recent economic shenanigans mean that one of my loans was bought and sold (and had the interest jacked up), so I'm looking into Earnest now. :) Looks like they like my credit enough to give me under 4%, which isn't so shabby at all.

[therethere]

Also, no need to refinance all of it. Just the higher interest ones. And you can continue to refinance later with different (or the same) companies if you get better rates or referral bonuses are worth it. I refinanced one loan to Earnest, then did it again a year later (still with Earnest) to get a lower rate.

[sisto]

@diapasoun Sounds like you have it under control. If it were me, I'd probably kill all of the debt over 5% ASAP, but that's just me. Way to go having a solid strategy.

[diapasoun]

@sisto It looks like I'll be able to refinance these to under 5% -- so killing the 5%+ debt in a weird way. :) (Thanks to you and @therethere for poking me to look into this; it wasn't a good move three years ago, but it's a good move now.)

[Dicey]

Hey @frugalecon, what a great idea! I can't believe I've missed this thread until now. I love this concept and the one about tracking the number of days of your post-FIRE life your investments have purchased are two incredibly powerful tools in the pre-FIRE arsenal.

I can't play, because I got there some time ago, but I sure as hell can sit on the curb and clap as you go by.*

*The actual quote is, "We can't all be heroes because someone needs to sit on the curb and clap as they go by." It's from Will Rogers, who's right up there with Yogi Berra and Dorothy Parker for quotable quips that are still relevant.

[frugalecon]

Hey @frugalecon, what a great idea! I can't believe I've missed this thread until now. I love this concept and the one about tracking the number of days of your post-FIRE life your investments have purchased are two incredibly powerful tools in the pre-FIRE arsenal.

I can't play, because I got there some time ago, but I sure as hell can sit on the curb and clap as you go by.*

*The actual quote is, "We can't all be heroes because someone needs to sit on the curb and clap as they go by." It's from Will Rogers, who's right up there with Yogi Berra and Dorothy Parker for quotable quips that are still relevant.

Thanks, @Dicey! I am really just a weirdo who likes to track things!

[sisto]

@sisto It looks like I'll be able to refinance these to under 5% -- so killing the 5%+ debt in a weird way. :) (Thanks to you and @therethere for poking me to look into this; it wasn't a good move three years ago, but it's a good move now.)

That's great!!!

[Arbitrage]

Don't think I'll be finishing this race until we sell the house/move; most of our investments are in tax-advantaged accounts.  Could be wrong, though I'm actually scaling back our taxable investing further this year due to an opportunity to fund a Mega Backdoor Roth IRA and HSA for the first time.

Mortgage: $(397.4k)
Student Loan: $(33k)
Taxable: $140.2k

Net: $(290.2k)

[RWD]

Mortgage: $158k
Porsche: $36k
Total debt: $194k

Vanguard brokerage: $177k

[2/1/2019] Net: ($17k)
[1/4/2019] Net: ($31k)
[12/4/2018] Net: ($28k)
[11/1/2018] Net: ($31k)
[10/1/2018] Net: ($21k)
[9/4/2018] Net: ($36k)
[8/2/2018] Net: ($37k)

Yay stock market! I also had some money leftover after fully funding our Roth IRAs so I tossed $4k into the taxable account last month. So the breakdown is $2k in principal decrease, $4k in taxable contributions, and a whopping $11k in stock market growth.

[frugalecon]

Total Debt: $226,285
Taxable Assets: $158,220

Net Debt:

[2.02.2019] ($68,065)
[1.03.2019] ($76,999)
[12.03.2018] ($80,591)
[11.30.2018] ($83,584)
[11.01.2018] ($90,537)
[09.03.2018] ($96,664)
[07.28.2018] ($103,664)

[RWD]

Just found this thread, but I realized today that I’ve hit this number. Or very close to it. By Friday I’ll be solidly over the line.

House $132,706 + car $8253 + student loan $7289 = $148,248
Accounts (HSA, IRAs, 401K) = $148,157

Feels like a big milestone.

Goal: knock debts down below taxable.

This thread is for comparing to taxable accounts. In other words, reaching the point where you could pay off your debts at any time without touching tax sheltered accounts or selling the underlying asset(s). You're free to measure whatever you want, just be aware you're playing a different game than the others in this thread.

[ItsALongStory]

Thanks for the clarification, in that case we are way way behind defeating the net debt.

Mortgage: $161k @ 3.625% (no PMI)
2nd mortgage: $49.5k @ 4.89%
Car loan: $18.5k @ 0%

Taxable: $14k

Total: $(215k)

At my current rate we are paying off $1300 in principal each month and saving about $1400 a month on the taxable side so about a $2700 swing each month. I guess without any market impact that means 79.63 months. I am eligible for a bonus and intend to put that towards the 2nd mortgage this year and next. My wife isn't in on the FIRE idea but our joint account is used to pay all 3 of these debts, I am solely contributing to my taxable account.

[Morning Glory]

Yikes, this one could take a while:
Mortgage: -216,524 (30 yr at 3.75%)
Taxable: 113,056
Net debt equals -103,468

Mortgage: -211,575
Taxable: 107,649
Net debt is -103,926
My taxable account hasn't quite recovered from the late fall drop, and all new contributions so far have gone to tax advantaged accounts.

[Slow&Steady]

We are not to the point of starting to put money into taxable but I would love to see our investments overshadow our debts, without consideration for equity, so I like this tracking measure.

Starting Debt: 189,160
Starting Rental Debt: 127,721 (it is a debt, income producing but still a debt)
Starting Taxable: 0
Starting 401K/IRA: 114,767

Current Debt: 188,004
Current Rental Debt: 125,881 (it is a debt, income producing but still a debt)
Current Taxable: 0
Current 401K/IRA: 114,151

Net Investments:
11/30/2018: 202,112
01/03/2019: 207,812 This went the wrong direction, mostly due to the market.
02/04/2019: 199,734

This update is much more fun to make than the Jan update was.  I am also starting to realize that by the time we get to the point that all of our tax advantaged accounts are fully utilized and we start putting money into taxable investments the debt total will be very small and easy to over come!

[Kierun]

Mortgage: ~395k
Mortgage: ~357k

Taxable: ~110k

Net: ~(642k)  :(

Mortgage: ~394k
Mortgage: ~356k

Taxable: ~114k

Net: ~(636k)

[ardrum]

I will be playing a low-scoring game:

Debt: ($9,667)
Taxable: 0

[achvfi]

I am joining in as well. So far over years, I failed to build substantial taxable investments. Something always comes up that eats away money I try to set aside in taxable. This year my focus is to increase taxable investments. I will try to throw as much as I can save staring this year. Wish me luck.
Starting Mortgage  = 112900
Starting Brokerage = 3100
Starting EF            = 12800

NET:
19 Feb = 97000

[ItsALongStory]

Thanks for the clarification, in that case we are way way behind defeating the net debt.

Mortgage: $161k @ 3.625% (no PMI)
2nd mortgage: $49.5k @ 4.89%
Car loan: $18.5k @ 0%

Taxable: $14k

Total: $(215k)

At my current rate we are paying off $1300 in principal each month and saving about $1400 a month on the taxable side so about a $2700 swing each month. I guess without any market impact that means 79.63 months. I am eligible for a bonus and intend to put that towards the 2nd mortgage this year and next. My wife isn't in on the FIRE idea but our joint account is used to pay all 3 of these debts, I am solely contributing to my taxable account.

Maxed out my IRA for 2019 today so that dropped my taxable account to just below 10k but it's for a solid reason.

Sent from my Pixel 2 XL using Tapatalk

[HBFIRE]

Fun goal.  I feel it's unfair for those of us without a mortgage or any other debt (renters).  I do plan to get a new mortgage within the next 2 years, perhaps my goal should be against that future debt.  Average mortgage for this area will approach 1M.  While we are FI for our current living costs with renting, I've decided to not purchase a home here until we are FI including the new mortgage for this area. Our business continues to thrive, so I am optimistically hoping to hit FI with high mortgage sometime in 2020. The past 5 years have been surreal, sometime I'll journal it when it's all over.  Taxable assets are difficult to estimate, as I have a lot tied up in my business for cash flow purposes, so I'll just go with a super conservative estimate with actual Vanguard brokerage investments + emergency fund.

Current Taxable: ~ 440 K
No other debts
Projected mortgage: 1M

Total (-560 K)

I have work to do.

edit:  Another way to think about it might be how much in taxable investments I need to cover my rent assuming a 4% WR (essentially enough investments to "buy out" my rent with approx inflation already calculated).  In this case, rent is 2600 * 12 = $31,200 * 25 = 780 K.  So I am @ approximately (-340 K) on this front.

[talltexan]

dustin, I do think that's a good way to think about it. Now go ramp up some assets to help land that big house!

[Mississippi Mudstache]

Investments: $210K
Mortgage: -$235K
Auto: -$6.3K

Net Debt

04 JAN 2019: -$43K
15 FEB 2019: -$31K

$12,000 in progess in a month-and-a-half. Not bad! Of course, that's mostly investment gains, but it's more impressive when you consider that I lost ~$8,000 on a 401(k) rollover this month due to employer match contributions that were not fully vested when I left :(

[Dicey]

Investments: $210K
Mortgage: -$235K
Auto: -$6.3K

Net Debt

04 JAN 2019: -$43K
15 FEB 2019: -$31K

$12,000 in progess in a month-and-a-half. Not bad! Of course, that's mostly investment gains, but it's more impressive when you consider that I lost ~$8,000 on a 401(k) rollover this month due to employer match contributions that were not fully vested when I left :(

Ouch! Hopefully it's short term pain for long term gain.

[Mississippi Mudstache]

$12,000 in progess in a month-and-a-half. Not bad! Of course, that's mostly investment gains, but it's more impressive when you consider that I lost ~$8,000 on a 401(k) rollover this month due to employer match contributions that were not fully vested when I left :(

Ouch! Hopefully it's short term pain for long term gain.

Yeah, I was never going back to work for that employer, so there was no point in keeping the $8,000 that I didn't actually own reflected in my net worth. The new 401k has lower fees, so I'm coming out ahead by moving the money over.

Might as well go ahead and update now that my March mortgage payment has posted:

Investments: $216K
Mortgage: -$234K
Auto: -$6.3K

Net Debt

04 JAN 2019: -$43K
15 FEB 2019: -$31K
01 MAR 2019: -$24K

Onward and upward!

[Slow&Steady]

We are not to the point of starting to put money into taxable but I would love to see our investments overshadow our debts, without consideration for equity, so I like this tracking measure.

Starting Debt: 189,160
Starting Rental Debt: 127,721 (it is a debt, income producing but still a debt)
Starting Taxable: 0
Starting 401K/IRA: 114,767

Current Debt: 184,669
Current Rental Debt: 123,999 (it is a debt, income producing but still a debt)
Current Taxable: 0
Current 401K/IRA: 120,300

Net Investments:
11/30/2018: 202,112
01/03/2019: 207,812
02/04/2019: 199,734
03/04/2019: 188,368

[RWD]

Mortgage: $157k
Porsche: $35k
Total debt: $192k

Vanguard brokerage: $182k

[3/1/2019] Net: ($10k)
[2/1/2019] Net: ($17k)
[1/4/2019] Net: ($31k)
[12/4/2018] Net: ($28k)
[11/1/2018] Net: ($31k)
[10/1/2018] Net: ($21k)
[9/4/2018] Net: ($36k)
[8/2/2018] Net: ($37k)

Assuming the stock market doesn't drop again our net debt should be defeated next month!

[achvfi]

I am joining in as well. So far over years, I failed to build substantial taxable investments. Something always comes up that eats away money I try to set aside in taxable. This year my focus is to increase taxable investments. I will try to throw as much as I can save staring this year. Wish me luck.
Starting Mortgage  = 112900
Starting Brokerage = 3100
Starting EF            = 12800

NET:
19 Jan = (97000)

Month     ->  Mortgage - Taxable - EF  = NET
2019 Feb -> 111616 - 3500 - 13134 = (94982)

[frugalecon]

Total Debt: $223,183
Taxable Assets: $160,413

Net Debt:

[3.02.2019] ($62,770)
[2.02.2019] ($68,065)
[1.03.2019] ($76,999)
[12.03.2018] ($80,591)
[11.30.2018] ($83,584)
[11.01.2018] ($90,537)
[09.03.2018] ($96,664)
[07.28.2018] ($103,664)

[ItsALongStory]

Thanks for the clarification, in that case we are way way behind defeating the net debt.

Mortgage: $161k @ 3.625% (no PMI)
2nd mortgage: $49.5k @ 4.89%
Car loan: $18.5k @ 0%

Taxable: $14k

Total: $(215k)

At my current rate we are paying off $1300 in principal each month and saving about $1400 a month on the taxable side so about a $2700 swing each month. I guess without any market impact that means 79.63 months. I am eligible for a bonus and intend to put that towards the 2nd mortgage this year and next. My wife isn't in on the FIRE idea but our joint account is used to pay all 3 of these debts, I am solely contributing to my taxable account.

Maxed out my IRA for 2019 today so that dropped my taxable account to just below 10k but it's for a solid reason.

Sent from my Pixel 2 XL using Tapatalk

Had the wrong balance for our mortgage so we took a step back in debt as well as in taxable due to filling Roth for 2019.

Mortgage: $164.7k @ 3.625% (no PMI)
2nd mortgage: $49.3k @ 4.89%
Car loan: $15.5k @ 0%

Taxable: $11k

Total: $(218.5k)


Sent from my Pixel 2 XL using Tapatalk

[Kierun]

Mortgage: ~394k
Mortgage: ~356k

Taxable: ~114k

Net: ~(636k)

Mortgage: ~392k
Mortgage: ~356k

Taxable: ~116k

Net: ~(632k)

[RWD]

Mortgage: $157k
Porsche: $35k
Total debt: $192k

Vanguard brokerage: $193k

[3/23/2019] Net: $1k
[3/1/2019] Net: ($10k)
[2/1/2019] Net: ($17k)
[1/4/2019] Net: ($31k)
[12/4/2018] Net: ($28k)
[11/1/2018] Net: ($31k)
[10/1/2018] Net: ($21k)
[9/4/2018] Net: ($36k)
[8/2/2018] Net: ($37k)

Calling it even before the next loan payments... Net debt defeated!

[frugalecon]

Mortgage: $157k
Porsche: $35k
Total debt: $192k

Vanguard brokerage: $193k

[3/23/2019] Net: $1k
[3/1/2019] Net: ($10k)
[2/1/2019] Net: ($17k)
[1/4/2019] Net: ($31k)
[12/4/2018] Net: ($28k)
[11/1/2018] Net: ($31k)
[10/1/2018] Net: ($21k)
[9/4/2018] Net: ($36k)
[8/2/2018] Net: ($37k)

Calling it even before the next loan payments... Net debt defeated!

Awesome RWD! Congratulations!

[diapasoun]

CONGRATS!!!!

[RWD]

Awesome RWD! Congratulations!

CONGRATS!!!!

Thanks!

[achvfi]

I am joining in as well. So far over years, I failed to build substantial taxable investments. Something always comes up that eats away money I try to set aside in taxable. This year my focus is to increase taxable investments. I will try to throw as much as I can save staring this year. Wish me luck.
Starting Mortgage  = 112900
Starting Brokerage = 3100
Starting EF            = 12800

NET:
19 Jan = (97000)

Month     ->  Mortgage - Taxable - EF  = NET
2019 Jan -> 112900 - 3100 - 12800 = (97000)
2019 Feb -> 111616 - 3500 - 13134 = (94982)
2019 Mar -> 111616 - 4134 - 13854 = (93628)

[Kierun]

Congratulations RWD, so what's the next challenge for you?  The race to 1M?