Politics

psu_dad
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Re: Politics

Postby psu_dad » Wed Jan 10, 2018 9:49 am

But, in fairness, the cost of interest on the home equity loan keeps going up and up now and, from a cashflow perspective, I'm better off.

My home equity loan has gone from 3% to 4% in the 15 years I've had it. My wife keeps mentioning paying it off, but the math doesn't make any sense I could pay off the home equity loan tomorrow by tapping my IRA, but that earned over 12% last year and it seems nuts to use money earning 12% to pay off a 4% loan.
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PittGradPSUMad
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Re: Politics

Postby PittGradPSUMad » Wed Jan 10, 2018 10:57 am

psu_dad wrote:But, in fairness, the cost of interest on the home equity loan keeps going up and up now and, from a cashflow perspective, I'm better off.

My home equity loan has gone from 3% to 4% in the 15 years I've had it. My wife keeps mentioning paying it off, but the math doesn't make any sense I could pay off the home equity loan tomorrow by tapping my IRA, but that earned over 12% last year and it seems nuts to use money earning 12% to pay off a 4% loan.


I'm in the same boat. My HELOC is now 4.5%.....up from 3.25% in three years since I opened it. Last year's 12% portfolio gain was nice but what happens when Mr. Market turns negative? I've set a ceiling of 5% before I tap retirement to pay it off. The other issue?...paying off the HELOC will put me in a higher tax bracket. I'll need to run the numbers, but it seems that withdrawing $10K annually to pay it off over four years might make better sense. I hate carrying debt.
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Blue&White
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Re: Politics

Postby Blue&White » Wed Jan 10, 2018 11:24 am

Mine is up to 4.5% too. I had an offer to redo it and lock it down to 2.99% for 24 months with a cap on how much it goes up a year, but I decided that I was better off refinancing out of it given the tax implications. Had that tax bill not taken away the HE deduction I would have just done the 2.99% deal but at this point I'm going to refinance and take the full tax deduction.
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psu_dad
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Re: Politics

Postby psu_dad » Wed Jan 10, 2018 11:51 am

Last year's 12% portfolio gain was nice but what happens when Mr. Market turns negative?

Always possible, but over the decades I've been able to count on an average annualized return of about 7%.

I've set a ceiling of 5% before I tap retirement to pay it off.


Great minds think alike. Like you, my wife hates carrying debt, even manageable debt. So as a compromise, I promised her that we'll pay off the home equity loan if/when it hits 5%

The other issue?...paying off the HELOC will put me in a higher tax bracket. I'll need to run the numbers, but it seems that withdrawing $10K annually to pay it off over four years might make better sense.

Agreed. I'd probably double or triple up on the payments rather than paying it off all at once.
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psu_dad
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Re: Politics

Postby psu_dad » Wed Jan 10, 2018 12:38 pm

I decided that I was better off refinancing out of it given the tax implications.

I'd definitely consider that if I had many years left on my primary mortgage, but I only have 8 months.

I think they should revise the tax bill to (1) eliminate the mortgage interest deduction, (2) restore the home equity interest deduction and (3) automatically transfer Mad's tax refund to my Paypal account.
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PittGradPSUMad
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Re: Politics

Postby PittGradPSUMad » Wed Jan 10, 2018 1:10 pm

psu_dad wrote: I decided that I was better off refinancing out of it given the tax implications.

I'd definitely consider that if I had many years left on my primary mortgage, but I only have 8 months.

I think they should revise the tax bill to (1) eliminate the mortgage interest deduction, (2) restore the home equity interest deduction and (3) automatically transfer Mad's tax refund to my Paypal account.


Howsabout if I just give you the remainder of my refund after I use part of it to pay off my heloc? I'm loving my middle class miracle more with each passing day. Thank you, president bullshit.....I mean.....President Trump, sir, because you're the best!
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psu_dad
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Re: Politics

Postby psu_dad » Wed Jan 10, 2018 4:07 pm

At least my taxes are going to be simpler. There's no reason to itemize. I've reached the advanced point in my mortgage where my payments are almost entirely principle. I can't deduct my home equity interest. And my SALT is (are?) capped.

Near as I can tell from the tax calculators, taking the standard deduction is a no-brainer for me.
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Blue&White
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Re: Politics

Postby Blue&White » Wed Jan 10, 2018 5:29 pm

That's exactly what I'm trying to avoid. If I have to take the standard, I lose. At some point I'll have to, most likely, but right now my deductions had been over $24k. I realize the lower rates offsets that some, but when I did the math last time it didn't work out for me.

It's hard to say exactly. Like I said earlier - there are all kinds of nuances to this thing that have not been well reported. I was going through it over the break and I think some of the deductions I took for my wife are gone, but it's not entirely clear yet. I guess asked me again in 14 months.
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Carl Spackler
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Re: Politics

Postby Carl Spackler » Thu Jan 11, 2018 3:25 pm

I'm like dad, standard deduction which will be a boon for us of an additional 12k deduction. We have 10 yrs on a 15 year refi but our interest is 2.65% so the interest isn't a major amount and decreasing monthly. We have also been paying it down knowing Mrs. will retire in six years of so. Then we sell and move back to the promised land, Pennsylvania.

If I were in B&W's situation I'd consult a good tax man and pay a bit more this first year to see what a good rep. could find in the new tax law that isn't apparent to the rest of us. It could be worth it. Good luck.

Blue&White
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Re: Politics

Postby Blue&White » Fri Jan 12, 2018 7:29 am

Well, so much for "Give us your tired, your poor, your huddled masses yearning to breathe free." I guess we need to replace that with "Send us more Norwegians!"
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