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Author: TexasSue Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308478  
Subject: Poll: Help me figure it out Date: 12/28/2013 10:03 PM
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The short of it ..

I have 125K in cash

I owe
Primary residence 100k 4% of 11 more years
investment property 75k 6.875 over 23 more years
Credit Cards 15k 3% for the next 6 months
Retirement loan 13K 4% over 5 years


What do I do with they money?
Pay off Credit Card, Retirement and Investment Property?
Pay off Credit Card and Primary Residence?
Pay off Credit Card and invest rest in stocks?
Dig a hole in the backyard and invest in Silver

Click here to see results so far.

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Author: TexasSue Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307608 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/28/2013 10:04 PM
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and Yes, I am gainfully employed

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307609 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/28/2013 10:43 PM
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Other.

Pay off the credit cards and the investment property, since the investment property has the highest percentage and the percentage for the credit cards could go up when the three months are up. Then invest the rest.

Nancy

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Author: TexasSue Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307611 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/28/2013 11:04 PM
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Even though the investment property is a tax writeoff and would only net me reall 6K annually ?

I've also included it my rainy day funds.. as well..

My other thought is to pay down the investment property by 1/2 .. keep 20K for emergencies, and pay off the credit card and retirement account...

or go to vegas.. that's also an option

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Author: TexasSue Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307612 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/28/2013 11:05 PM
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I was thinking the stock market will soar next year.. and I could make some sweeping gains by investing it.. am I being too naieve?

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307613 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/28/2013 11:41 PM
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I was thinking the stock market will soar next year.. and I could make some sweeping gains by investing it.. am I being too naieve?

Are you willing to take the risk that the stock market could also tank, and you could end up with half of the amount that you invested?

I would strongly suggest that the first thing that you do would be to put away money for an emergency fund, pay off the retirement loan and the credit cards.

For the investment property - if it's not cash flow positive, and you can't refinance it (possibly using some of the cash you have to pay down the loan amount) so that it can be cash flow positive, then I would strongly suggest selling it. Assuming your screen name indicates that the investment property is in Texas, too, then your income tax deductions are saving you, at most, 35% of every dollar you spend. If you want to spend money that way - I'll tell you what, you can send me money, and I'll send you back 80%. You will end up with more money in your pocket and fewer headaches than keeping the investment property.

After you pay off the credit card and retirement loans, fund your emergency fund and possibly put some of the money towards refinancing the investment property, then either invest the rest, or put it into a savings account to save up until you have enough to pay off either the investment property or your primary residence mortgage.

AJ

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Author: TexasSue Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307614 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/29/2013 12:00 AM
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ok. .so
125
- 15 CC
- 13 retirement loans
- 20k emergency fund
that leaves 75k
- 2k to refi to make the property cash positive -- which right now is netting me like 2-3% .. after I hada horrible tenant that leveled it..and I had to do a complete remodel

and invest 73K .. or seriously AJ .. just pay it off..


My other thought was to sell both properties and live in a travel trailer my late husband owned.

Widowed @45 :(

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Author: MetroChick Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307618 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/29/2013 11:35 AM
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I would pay off the CC debt and retirement loan.

If you don't have a 8-12 month e-fund, I would fund that next.

With any remaining money - I would first decide what are your long-term goals for the primary residence and investment property.

If you want to keep the investment property as an investment, I would see if you could refinance to a lower rate, and if it would then be cash-positive based on market rents. I wouldn't pay it off, since the rental should pay it off over the long run.

If you want to stay in your primary residence, I also wouldn't pay it off, since 4% is a good rate by historical figures. With any left over money, I would invest in stock index funds as long as I had at least 10 years to leave the money in there - if I couldn't ride out highs/lows of the stock market well or had less time, than I'd put 50% (or less) in the stock market and the rest in something safer.

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307620 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/29/2013 11:44 AM
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I was thinking the stock market will soar next year.. and I could make some sweeping gains by investing it.. am I being too naieve?

I doubt it will do that two years in a row.

PSU

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307622 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/29/2013 12:45 PM
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One more question that I forgot to ask. Are there any taxes that will be due on the $125k? If so, those taxes need to be set aside first, before you start spending money on anything else.

- 20k emergency fund

Is $20k enough for an e-fund? How many months of expenses will $20k cover - including the investment property expenses?

that leaves 75k
- 2k to refi to make the property cash positive -- which right now is netting me like 2-3% .. after I hada horrible tenant that leveled it..and I had to do a complete remodel

and invest 73K .. or seriously AJ .. just pay it off..


Well, I'm not sure what you mean by refinancing to make the property cash positive, when you say in the next phrase that it's netting you 2% - 3%. Are you counting tax benefits as part of a 'net positive'? If so, you are essentially investing in the property every month, as you are cash flow negative. Is that the investment you want to make? Do you want to refinance, and have some positive cash flow each month? Do you want to pay it off and have a higher positive cash flow each month?

You really need to decide what you want to do.

If you can have an investment property that has positive cash flow, AND you want to continue to be a landlord, then you need to decide if the additional cash flow you would get by paying off the property instead of refinancing is the investment that you want to make, or if you would rather invest in something else.

If you don't want to be a landlord, then you need to sell it.

Whatever you decide, I would strongly suggest an 'investment' that requires you to put cash into it each month isn't really an 'investment' - it's an expense.

Widowed @45 :(

Sorry for your troubles. If his death was recent, after paying off the retirement loan and the credit cards, it might be better to just put the rest of the money away someplace safe (a CD, a savings account, etc.) and figure out what you want to do with your life before spending the money in a way that you may regret in a few months.

AJ

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Author: TexasSue Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307623 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/29/2013 1:24 PM
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AJ

the 125 is after tax.. I don't want to go to prison.. first things first

20K should be enough coupled with the private unemployement insurance I purchased should something go amiss.

Rental property is like 1/4 a mile from my primary residence in a desireable neighborhood. .

Rental nets me like 60$ month positive cash flow plus a tax break .. if I refi'd I could get a more positive cash flow.. but then I am trying I think to get the most bang for my buck .. I just want to win the lottery . but then again doesn't everyone.

My husband has been gone for a little less than 1/2 a year .. I feel like holding on to anything out side of 20K is a waste.. and it should be invested .. otherwise I am doing no more than putting it in a hole in the ground.. and tht is a losing strategy .. I detest CDs, and getting .5 % in a savings account while they loan out my money to others .. is also a waste.

Apparently I am attached to owning property .. am having a hard time of letting it go based on the dallas housing market.. and the exponential growth.. I think it is a good long term investment..


> > the other crazy thought I had was to sell everything both houses.. take the cash and buy a foreclosure at auction that is coming up.

or

>> sell everything and move into his travel trailer.. Sometimes I think I am a simple person.. and don't need all the stuff I seem to have acquired..

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307624 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/29/2013 3:36 PM
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20K should be enough coupled with the private unemployement insurance I purchased should something go amiss.

What are the terms of the insurance you purchased? I've only seen one company that offers this type of insurance, and their terms don't seem to provide all that much 'coverage' to me. The maximum term on the insurance is 26 weeks, but the first 2 weeks are a 'waiting period' - so you only get 24 weeks of coverage. Then, the insurance only pays in addition to your state unemployment insurance, so even though it's advertised as covering 50% of your employment income, the insurance doesn't provide the entire 50% by itself - the insurance and the state's unemployment benefits add up to provide you the 50%. And then, because it's in conjunction with the state unemployment insurance, if you don't qualify for unemployment benefits from your state (for instance, because you quit your job or were fired for cause according to your employer, etc.), you won't get the private unemployment insurance either.

Because not all 'emergencies' involve loss of a job in a way where you will be paid unemployment insurance, counting on the private unemployment insurance for much of your 'emergency' fund seems to be assuming you will have a specific type of 'emergency'. In that case, I would call it an 'I lost my job in a way that I can claim unemployment' fund, rather than an 'emergency' fund.

Rental nets me like 60$ month positive cash flow plus a tax break .. if I refi'd I could get a more positive cash flow

The $60/month positive is after all costs? Including, but not limited to: principal, interest, taxes, insurance, maintenance/repairs, allowance for vacancy.....

And don't forget, much of that depreciation tax break that you are getting now will be recaptured when you go to sell, and end up paying capital gains taxes based on the depreciated basis.

I feel like holding on to anything out side of 20K is a waste.. and it should be invested .. otherwise I am doing no more than putting it in a hole in the ground.. and tht is a losing strategy .. I detest CDs, and getting .5 % in a savings account while they loan out my money to others .. is also a waste.

Well, then you need to do what will let you sleep well at night. Having seen that investments can and do lose significant value in a very short time, I would say that investing can also be wasteful.

Apparently I am attached to owning property .. am having a hard time of letting it go based on the dallas housing market.. and the exponential growth.. I think it is a good long term investment..

In general, sustainable increases in housing tend to track the overall inflation rate - maybe a percent or two more each year. Counting on anything higher than that is counting on unsustainable increases.

But again, it's what allows you to sleep at night.

> > the other crazy thought I had was to sell everything both houses.. take the cash and buy a foreclosure at auction that is coming up.

or

>> sell everything and move into his travel trailer.. Sometimes I think I am a simple person.. and don't need all the stuff I seem to have acquired..


Seems to me that you still don't have your long term goals set after the shocks you have suffered in the past year or so. You will probably be best off in the long run if you figure out what you want those long term goals to look like, and then figure out how you can use your resources to get to those goals before you make your investment decisions. Parking the money in a savings account for a few months is unlikely to have a negative effect in the long term, and it might keep you from spending money in a way that you find was wasteful when you determine what your long term goals really are.

AJ

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Author: TexasSue Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307625 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/29/2013 5:28 PM
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Short of a tornado or an airplane hitting my house.. my friends and insurance agent said statistically I should lead the most boring life, after I win the lottery.

have had 3 .. yes 3 near fatal accidents.. none of which were my fault, nor could have done anything about.. including driving on the highway during rush hour, middle lane only to have a semi/tractor trailer lose it's brake assembly and fly through the windshield of my car at 70mph. Yes I was ok. ended up with scratches and a tetanus shot. <I have bought long term care insurance after that just in case>

You are right on about the unemployment insurance and it's terms.


The rental was purchased as an investment for my mom, who passed just about 4 months after I closed. I net actually $125 a month (without tax breaks) when all is said and done . and have had to throw in a major remodel at one point.. so it's almost new on the inside. I lower it to $60 to make sure I cover the monthly maintenance. I will either raise the rent $100 this year or move to sell.. I have around 60k in equity .. 30 of which I put in.. 30 of which renters put in.

My only long term goal is to not be a bag lady.. and to have enough to cover basic needs. REally enough to buy some PB&J to eat for dinner.

I have 1 home paid for and locked up not renting due to the economy in the area.. but wouldn't mind living there if holy hell broke lose.. or I came into a nice cash stream.

My father and I use to sit and chart out stocks as a young girl. he was really good.. wish my memory were better..


I want to invest I just dont' want to lose.. but neither does anyone else.. and Vegas and I dont' see eye to eye lately.. .. I just want it all to magically better ..

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Author: TexasSue Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307626 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/29/2013 5:30 PM
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I will move to payoff the cc and retirement loan.. and hold on to the rest. that does make sense for me at least now

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Author: TexasSue Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307627 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/29/2013 8:59 PM
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@AJ - so if you are still in Plano.. can I just buy you a cup of coffee and chat?

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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307639 of 308478
Subject: Re: Poll: Help me figure it out Date: 12/30/2013 5:29 PM
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TexasSue,

You wrote, @AJ - so if you are still in Plano.. can I just buy you a cup of coffee and chat?

Sorry, I dragged her up to Seattle with me last year. :-)

I still have family down there, so we'll be back from time to time...

- Joel

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