I was two years into my first house and one year into a new financed truck. Being tired of making $500 a month payments and seeing how I could get a HELOC for a better rate, I used a portion of that money to pay off the truck. Essentially, took money from an asset that was appreciating and used it to pay down a liability that was depreciating. Hugely stupid. That added 30k to my mortgage.
In the end this didn’t hurt me much because I doubled my money on the house and I still own the truck, it’s 22 years old now. However, I will never do anything like that again.
This would be akin to paying down credit card debt by refinancing your house, but that would be even worse.
It’s experiences like this that have me on a debt free journey.
Yes, it was lower, but you’re still trading good money for bad, giving up equity that will gain value for a truck that will lose value. It’s a good short term feel good move, but a long term fail, except that I still own the truck, so there’s that.
Yep. It has 225k on it, but it’s currently on non-op status while I drive a different truck. When the current truck dies, I’ll register and drive it again.
This one is a "make sure the juice is worth the squeeze" scenario...
5% home and 7% auto... no.
6% home and 25% credit card... hell yes.
And beware the "house/property is an asset" trap... if you have to put money into a thing to keep it, it's a liability. It can appreciate in value and Still be a liability.... if you lose your income and don't pay taxes, you can lose that "asset". Just a bad mental mindset to adopt. I know, it's contrary to what's commonly spewed forth... but so was standing up and criticizing the convid/vax bs. Engage your brain and think about it. Assets aren't threatened by loss of income.
You missed the part where I sold that house, doubling my money, then bought another house, free of capital gains and will pay that house off in 3 years. It rents for $2200 a month.
I can see that Lice monkey. Debt free (mostly) here as well. The thing about adding it to the house payment Nozyedys, is that you took a 4 year loan (likely) and made it a 30 year one. So make sure you don't have a prepayment penalty and pay that shit off ASAP is a good move as long as you traded a 20 Percent loan for a 5% one kind of thing.
The worst position to be in concerning home ownership is to have a substantial equity position. If you are unable to pay for any reason, the bank will go after foreclosure as soon as they can. Owning it free and clear, or having a huge loan with minimal equity are better positions.
Reminds me of when I took around 8k and paid off my truck shortly after buying my house. I thought it would be responsible to may off smaller debt.
Being the start of my mortgage loan, paying that 8k at the beginning of the loan would have taken years off the loan because of the money saved on interest paid at the beginning of the loan. $900 a month payment with only $75 going toward the principal each month.
[ - ] Feelsgood 1 point 2.0 yearsJul 4, 2023 12:36:33 ago (+1/-0)
I have a realtor fried who advised me to never fully pay off my house. Litterly called it a piggy bank.
His justification was that with the bank having ownership you will have a bank funded set of lawyers working to protect your house from the HOA or frivolous lawsuit.
Who knows? Maybe just a Jewish trick to make sure you are a life long debt slave.
That’s a bunch of bad advice. It’s not even worth having a mortgage for the tax writoff, as 80% of folks file taking the standard deduction and never use their mortgage interest as a write off. RE people want to keep you in the business of debt, just like the mortgage people.
[ - ] cb1 1 point 2.0 yearsJul 4, 2023 10:36:01 ago (+1/-0)
People often times think they are making good financial decisions by "consolidating" debt and using HELOCs in the way you did. Moving debt from one place to another isnt necessarily a bad decision, it is however a futile decision. It doesnt move the needle.
[ + ] Nozyedys
[ - ] Nozyedys 7 points 2.0 yearsJul 4, 2023 09:52:27 ago (+7/-0)
[ + ] TheOriginal1Icemonkey
[ - ] TheOriginal1Icemonkey [op] 0 points 2.0 yearsJul 4, 2023 11:33:43 ago (+0/-0)
[ + ] con77
[ - ] con77 3 points 2.0 yearsJul 4, 2023 10:33:57 ago (+3/-0)
[ + ] TheOriginal1Icemonkey
[ - ] TheOriginal1Icemonkey [op] 1 point 2.0 yearsJul 4, 2023 11:31:33 ago (+1/-0)
[ + ] anothergoatinthewall
[ - ] anothergoatinthewall 2 points 2.0 yearsJul 4, 2023 20:25:38 ago (+2/-0)
5% home and 7% auto... no.
6% home and 25% credit card... hell yes.
And beware the "house/property is an asset" trap... if you have to put money into a thing to keep it, it's a liability. It can appreciate in value and Still be a liability.... if you lose your income and don't pay taxes, you can lose that "asset". Just a bad mental mindset to adopt. I know, it's contrary to what's commonly spewed forth... but so was standing up and criticizing the convid/vax bs. Engage your brain and think about it. Assets aren't threatened by loss of income.
[ + ] TheOriginal1Icemonkey
[ - ] TheOriginal1Icemonkey [op] 0 points 2.0 yearsJul 4, 2023 20:56:12 ago (+0/-0)
[ + ] beece
[ - ] beece 2 points 2.0 yearsJul 4, 2023 12:47:10 ago (+2/-0)
The worst position to be in concerning home ownership is to have a substantial equity position. If you are unable to pay for any reason, the bank will go after foreclosure as soon as they can. Owning it free and clear, or having a huge loan with minimal equity are better positions.
[ + ] TheOriginal1Icemonkey
[ - ] TheOriginal1Icemonkey [op] 0 points 2.0 yearsJul 4, 2023 15:47:35 ago (+0/-0)
[ + ] Feelsgood
[ - ] Feelsgood 2 points 2.0 yearsJul 4, 2023 12:43:20 ago (+2/-0)
Being the start of my mortgage loan, paying that 8k at the beginning of the loan would have taken years off the loan because of the money saved on interest paid at the beginning of the loan. $900 a month payment with only $75 going toward the principal each month.
[ + ] Feelsgood
[ - ] Feelsgood 1 point 2.0 yearsJul 4, 2023 12:36:33 ago (+1/-0)
His justification was that with the bank having ownership you will have a bank funded set of lawyers working to protect your house from the HOA or frivolous lawsuit.
Who knows? Maybe just a Jewish trick to make sure you are a life long debt slave.
[ + ] TheOriginal1Icemonkey
[ - ] TheOriginal1Icemonkey [op] 1 point 2.0 yearsJul 4, 2023 15:49:54 ago (+1/-0)
[ + ] cb1
[ - ] cb1 1 point 2.0 yearsJul 4, 2023 10:36:01 ago (+1/-0)
[ + ] TheBigGuyFromQueens
[ - ] TheBigGuyFromQueens 1 point 2.0 yearsJul 4, 2023 08:26:08 ago (+1/-0)*
[ + ] con77
[ - ] con77 2 points 2.0 yearsJul 4, 2023 10:33:29 ago (+2/-0)