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  • fatlittlepig
    replied


    So, with future cash flow unknown, I took on some extra debt as an insurance policy, and that’s the only reason I took out the car loans about 3 years ago.
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    So your expenses are too high so you took on a lot of debt and because of that debt you took on extra debt as an insurance policy, hmm makes perfect sense.

    Leave a comment:


  • Lordosis
    replied
    Is cash flow an issue?  If so pay off a smaller loan to free some up.  If not pay off the highest rate.

    Leave a comment:


  • Peds
    replied


    as this makes the most sense but will take much longer.
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    what does time mater when you save the most money?

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  • EntrepreneurMD
    replied




    Do it the mathematically correct way.
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    Sounds like you feel highest rates first after tax impact and rate resets factored. That would likely still be the commercial loan over the personal home loan. I'm torn as this makes the most sense but will take much longer.

    Still, definitely considering. Interesting to see what the consensus will be. Thanks!

    Leave a comment:


  • EntrepreneurMD
    replied




    A lot of it is personal. I would never carry a balance on a card (i.e. pay it off monthly) regardless of any kind of introductory interest rate. I would also never have a car payment. The commercial loan and home loan wouldn’t bother me as much. However, given your situation and that you want all of your loans paid off in the next 2-3 years, I would pay off the car and credit card today followed by whichever out of the commercial and home loan ends up having the highest effective interest rate for your scenario.
    Click to expand...


    Thanks for the objective feedback. I've been doing 0% no transfer fee cards for 25 years, thought more physicians may be doing this. In any event. You are correct, I certainly plan to pay off this debt or transfer it at 0% before the intro term expires.

    An explanation of the car loan, as I agree car loans are not the best other than low interest rates. When I built the commercial office, the consultants warned me about cash flow with such a big project. They probably didn't already understand how paranoid I am about risk anyway. So, with future cash flow unknown, I took on some extra debt as an insurance policy, and that's the only reason I took out the car loans about 3 years ago. Now two years into the building, cash flow is better than I expected. These loans didn't actually cost me anything, as my CD and some savings interest rates gave me a better return on the money than the loan rate.

    It feels natural to me to pay off the smallest debts first as you suggest so definitely a strong strategy consideration, with the benefit of lowering monthly debt payments immediately (part of the reason why I diversified the loan in the first place, in addition to lower rates on this debt). Thanks again.

    Leave a comment:


  • fatlittlepig
    replied
    Your finances are a mess, I feel bad for you. I would suggest reading one of these “personal finances for dummies” type of book. Good luck. (Not meant to troll you, actually being serious here)

    FLP

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  • CordMcNally
    replied
    A lot of it is personal. I would never carry a balance on a card (i.e. pay it off monthly) regardless of any kind of introductory interest rate. I would also never have a car payment. The commercial loan and home loan wouldn't bother me as much. However, given your situation and that you want all of your loans paid off in the next 2-3 years, I would pay off the car and credit card today followed by whichever out of the commercial and home loan ends up having the highest effective interest rate for your scenario.

    Leave a comment:


  • Peds
    replied
    Do it the mathematically correct way.

    Leave a comment:


  • EntrepreneurMD
    started a topic Debt Repayment Strategy

    Debt Repayment Strategy

    Is there a general rule regarding debt repayment, or is it specific to one's own circumstances (income, NW, tax benefits of debt, etc.)?

    Commercial loan $1.4M 10 year (no balloon) 3.5% fixed, 8 years left, payment is $17K/month

    Home loan $350K 5 year arm 2.75%, resetting 11/1/2019, payment is currently $1700/month

    Car loan $65K 6 year loan 1.75%, 3 years left, payment is $1700/month

    Credit card debt $45K 0% intro term, resetting 1/2020, 4/2020 split about 50/50 on two cards, minimum payment is currently $470/month.

    CD interest income 2.65%-3% 12-18 month CD terms, savings interest 1.5%-2.3% with combined interest income about $50K/year on $2.1M cash flow reserves for annual expenditures (not expenses) about $1.9M.

    Pay off highest interest rate debts off first? Pay off smallest loans first to decrease monthly payments/improve cash flow? Pay off non tax-advantaged auto loans first? Pay off by riskiest attached asset? Pay off everything and wipe out reserves? Pay off debts as they reset from low to high interest rate (5 year ARM, credit cards) or refinance them to pay off highest debt rates first.

    Do not recommend I invest it in these markets instead, you all know how I feel about the current markets, it's not 2009. I'm more interested in debt repayment strategies. However I proceed, I wanted all debts paid off in next 2-3 years.

    How would you tackle? Thanks in advance.
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