Americans owe $1 Trillion on their cars

[BehindBlueI's]

but... what if your investment goes down?

.

There's risk either way. If you're properly diversified, it's tough to lose money long term.

 

[Fizzerpilot]

but... what if your investment goes down?

You lost. No returns are guaranteed. And it's not a long term investment, it's for the term of the auto loan. Also consider, you actually have to have the money to invest, to make it work. If you play this game, you really need the cash for the purchase, in the bank. Most folks don't, which is precisely why they finance. Without those funds aside to invest, you net nothing.

 

[hoosierdoc]

.

There's risk either way. If you're properly diversified, it's tough to lose money long term.

Sure, but we're only talking about the term of a car note.

 

[hoosierdoc]

You lost. No returns are guaranteed. And it's not a long term investment, it's for the term of the auto loan. Also consider, you actually have to have the money to invest, to make it work. If you play this game, you really need the cash for the purchase, in the bank. Most folks don't, which is precisely why they finance. Without those funds aside to invest, you net nothing.

I got a HELOC for 3.25%. Should I max that out and invest it?

 

[Route 45]

 

[hoosierdoc]

A goat is often the last to drink from a water bowl

Your turn.

 

[Fizzerpilot]

I got a HELOC for 3.25%. Should I max that out and invest it?

Based on the premise of this thread, yes. You should NEVER pay off your home. In fact, you are better off with an interest only loan, and invest the cash. Having equity only steals from your available investment cash. You should carry minimum equity, and maximum debt... how does that make you feel?

However, I much prefer owning a $210k home when I lose my job, but that's because I'm an emotional wreck.

 

[Route 45]

A goat is often the last to drink from a water bowl

Your turn.

 

[BehindBlueI's]

I got a HELOC for 3.25%. Should I max that out and invest it?

.

Serious question, or just making a point?

If you're serious, what's your emergency savings look like? If your investment does tank, what does that look like for your lifestyle?

With the understanding it's a giant pain in the backside, if you had enough to buy some small rental properties it'd be tough to not make enough to cover the loan. I'd strongly recommend you use a property management company, though, unless you are looking for a part time job with your investment. Stocks may fluctuate more, but they don't call you at 2am because a pipe burst.

 

[BehindBlueI's]

Sure, but we're only talking about the term of a car note.

.

I-bonds are paying more than my interest rate at the moment. If the US Gov't goes under, paying off my car note will be way down on the list of priorities.

Even over 5-6 years, something like a S&P 500 mutual fund is pretty unlikely to tank. It could. We could have another 9/11. That's where the whole emergency savings thing and adjusting to changing times occurs.

 

[hoosierdoc]

Exactly!

.

Serious question, or just making a point?

making a point.

If I bought a few rentals, then they sat open, I'd be hosed.

 

[BehindBlueI's]

If I bought a few rentals, then they sat open, I'd be hosed.

.

Honestly, that's another reason to use a property manager. My property was never empty longer than a month. It's actually easier if you have multiples, as the occupieds float the vacants. You do need a certain risk tolerance, though, and if your property manager screws you you get screwed hard.

 

[lovemachine]

All this math is giving me a headache.

We took out a home equity loan for our adoption. Luckily, we didn't have to use it. It was at 3.75%, just went up to 4% today. I was told I could get a good deal by using that to finance a truck. I thought it would be smarter to use it to have a gas furnace installed in my house, we have electric baseboard now.

It would mean my property value would increase.

But I know it would be even smarter to just save up the cash.

And I still want a 4-door F150, or a Silverado.

 

[hoosierdoc]

fun fact, you can't deduct the interest on a HELOC if it was not used for home improvements or something similar, such as credit card debt, "I think". Best to check with an accountant or the internet gun forums

http://blog.turbotax.intuit.com/tax...s-of-home-equity-lines-of-credit-heloc-23804/

 

[Fizzerpilot]

If you didn't use the HELOC, why do you still have it?

 

[lovemachine]

If you didn't use the HELOC, why do you still have it?

We only finalized the adoption a few weeks ago. Then got busy with work. And honestly, I wanted to wait until my sons hospital bills came thru. We didn't know what to expect.

 

[lovemachine]

Do you just call the bank and have the HELOC cancelled?

 

[Fizzerpilot]

Crap, I dunno... I don't borrow money

 

[hoosierdoc]

Do you just call the bank and have the HELOC cancelled?

I think we had to fill out a form, but it may have been a phone call, don't recall honestly.

We have one that we used for the pool and then recently used to fund the IRAs (until bonus comes in), dumb, I know, but I'll save a lot in taxes.

Handy to have for purchases but hope to close it in a year when we're out of debt.

 

[lovemachine]

Crap, I dunno... I don't borrow money

Quit bragging.

I was VERY lucky to have done the adoption without going into debt. Turned my hobby into a second job....