UnThreaded | Threaded | Whole Thread (60) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: 401kinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308787  
Subject: Re: Settlement Date: 1/1/2013 12:06 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
AJ"
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.....


WAIT HOLD UP MAN I disagree entirely.

I pay pmts on the car so I don't have to give the money to mom and dad. It keeps my credit rating up. I'm not paying the car off.

Currently balance at Schwab: 1) Individual account = $24,727 2) Rollover IRA =$17,209 3) Roth IRA $24,798 4) 401K = $35,437

CD's at Sunwest FCU: $7,400
CD at Nationwide Bank $503.00
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (60) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Berkshire Hathaway

Berkshire Beyond Buffett Event
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement