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Personal Finances / Credit Cards and Consumer Debt
|Subject: Re: Settlement||Date: 12/31/2012 10:43 PM|
|Author: aj485||Number: 306577 of 309116|
Once the check arrives it will take 10 days for the bank to clear the check. My intention is to buy many shares as I can of Chase common stock
and reinvest the div.
Why are you not going to pay off your $13k car loan?
Oh, wait, you're trying to make money from arbitrage, because you are getting a 2.8% yield from JPM, while your car loan is 'only' costing you 2.49%.
But after taxes, you are going to be losing money. Even if the 15% tax rate survives the fiscal cliff, adding on 3.36% or 4.24% Arizona state tax, you will lose 18% or 19% from your 2.8% dividend rate, so you will net, at best 2.3% - which is less than your car loan rate. And if the Federal rate on dividends does go up to ordinary income rates, it will probably be a 28% or 29% loss to taxes, netting you about 2.0%
But wait, there's more....
Paying off your car loan with the $20k (assuming the other money is actually going to the insurance company and hospital), and using the other $7k of the money as an emergency fund would mean that you wouldn't be able to post your quarterly debt updates any more because your debt would actually be paid off and you wouldn't be living paycheck to paycheck any more. But that would actually be being financially responsible.....
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