pick one for me..

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TarHeel2002
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Joined: Sun Jun 17, 2012 2:14 pm

pick one for me..

Post by TarHeel2002 » Thu Nov 09, 2017 11:06 am

(All tax deferred investments are being maxed out annually)
37 y.o. married with a couple kiddos.

What to do with some extra monthly cash flow?

1. Accelerate pay off 15 year fixed 4.75% rental property mortgage of 198k.
2. Accelerate pay off of 30 year fixed 3.125% home mortgage of 156k.
3. Add to taxable investing VTSAX.
4. Something else I'm not thinking of?

brad.clarkston
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Location: Kansas City, MO

Re: pick one for me..

Post by brad.clarkston » Thu Nov 09, 2017 11:09 am

#1 first then #2 or the other way around at least.
Pay off all debt first.

John Laurens
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Re: pick one for me..

Post by John Laurens » Thu Nov 09, 2017 11:11 am

Assuming you have a healthy EF and no other debts and you like being a landlord, I would throw everything at the rental debt.

Regards,
John

chevca
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Re: pick one for me..

Post by chevca » Thu Nov 09, 2017 12:02 pm

I would probably do number 2 out of those choices.

I'm assuming the rent covers that mortgage and then some, and that you get to utilize all deductions available with the rental? From a pure numbers standpoint, that one does have the higher rate. But, if someone else is paying that interest through the rent and you get to write off the mortgage interest on the rental, why attack that mortgage?

victw
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Re: pick one for me..

Post by victw » Thu Nov 09, 2017 12:06 pm

I'd do a mix also.
Are college funds set aside for the kids? If not - then accelerate the mortgage with an eye on paying off when the kids are hitting college age. Then move mortgage payment to college payment.

In other words - think of some of this in terms of life cycle.

Vic

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Sandtrap
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Location: Hawaii😀 Northern AZ.😳 Retired.

Re: pick one for me..

Post by Sandtrap » Thu Nov 09, 2017 12:08 pm

#1 concurrently with #2 & #3

URSnshn
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Re: pick one for me..

Post by URSnshn » Thu Nov 09, 2017 12:55 pm

#1, then #2

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bengal22
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Location: Ohio

Re: pick one for me..

Post by bengal22 » Thu Nov 09, 2017 2:05 pm

Hard to answer without knowing how much you have in taxable. In my case, I retired early 60's and I have used my taxable account to make up the difference between my pension income and my wife's SSA versus my expenses. I am holding off until 70 to claim my SSA. So once my SSA kicks in and I have to start RMD's I will not need my taxable account much(if at all). I also used my taxable account to fund my children's college. So maybe I would recommend a hybrid answer of 1 and 3. I am retired and I still hold a 15 year mortgage.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

bloom2708
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Re: pick one for me..

Post by bloom2708 » Thu Nov 09, 2017 2:13 pm

Sell rental property. Put any balance on your primary residence mortgage.

Then just pay the normal payment as your taxable grows. One day get sick and tired of your mortgage and pay it off.

Some love rentals. One job is more than enough for me.
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

TarHeel2002
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Re: pick one for me..

Post by TarHeel2002 » Thu Nov 09, 2017 3:02 pm

Thank you for the feedback.

0 in taxable so this would be something new to start and grow.

tax deferred portfolio mid six figure.

I cannot sell the rental - I operate my business out of it. I am my own tenant.

My E fund is 6 months - 30k.

LukeHeinz57
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Location: Ohio

Re: pick one for me..

Post by LukeHeinz57 » Thu Nov 09, 2017 3:12 pm

#1...but I'd invest before paying down #2.
"Contentment", the only thing you ever truly need more of!

chevca
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Re: pick one for me..

Post by chevca » Thu Nov 09, 2017 4:51 pm

TarHeel2002 wrote:
Thu Nov 09, 2017 3:02 pm
Thank you for the feedback.

0 in taxable so this would be something new to start and grow.

tax deferred portfolio mid six figure.

I cannot sell the rental - I operate my business out of it. I am my own tenant.

My E fund is 6 months - 30k.
Oh, then pay that off first.

Is that a rental or a business? You pay yourself rent??

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badbreath
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Re: pick one for me..

Post by badbreath » Thu Nov 09, 2017 6:15 pm

I would do #3 a taxable account is a great thing to have and can let you do #1 or 2 latter one if you what to.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

TarHeel2002
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Joined: Sun Jun 17, 2012 2:14 pm

Re: pick one for me..

Post by TarHeel2002 » Thu Nov 09, 2017 6:34 pm

College 529 savings are in progress and growing.

I do pay myself rent on the rental property. I positive cash flow $500/month on the property (rent check - rental mortgage payment).

chevca
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Re: pick one for me..

Post by chevca » Thu Nov 09, 2017 7:07 pm

TarHeel2002 wrote:
Thu Nov 09, 2017 6:34 pm
I do pay myself rent on the rental property. I positive cash flow $500/month on the property (rent check - rental mortgage payment).
:confused I'm sure there's more to it than I know tax wise or whatever, but I don't see how paying yourself makes for positive cash flow.

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