Yakky put up a post about what to do with 42K?
Well I have that dilemma and as I value the opinion of quite a few people on here, perhaps they would care to give me their opinion.
I promise to take it on board as I need the advice.
Scenario: sold a block of land I have 48k. Out of this I have to repay the balance of funds friewnds lent me. So remove 3k and I have 45k left.
what do I do?
Do I pay off my credit card debt which is enormous at 25k ( i used this short term to finish some deals and my own reno) Four cards with that debt so interest is lessened a bit.
Then use balance for a deposit on a place say in regional area?
2) do I pay off some debt, keep some cash, use a deposit toward property
3) do I buy a property outright use income to pay off credit card plus my own income? Property would be positive in this instance.
4) use it as deposit for three or four regioanl properties and worry about credit card debt later?
5) pay it off my own mortgage and forget the rest? That then gives me more equity and reduces my monthly loan repayments…
any other thoughts?
cheers
Elves
” a blind man may see what a sighted man may not”
Replied in BLUE
Originally posted by elves:Yakky put up a post about what to do with 42K?
Well I have that dilemma and as I value the opinion of quite a few people on here, perhaps they would care to give me their opinion.
I promise to take it on board as I need the advice.
Scenario: sold a block of land I have 48k. Out of this I have to repay the balance of funds friewnds lent me. So remove 3k and I have 45k left.
what do I do?
Do I pay off my credit card debt which is enormous at 25k ( i used this short term to finish some deals and my own reno) Four cards with that debt so interest is lessened a bit.
Then use balance for a deposit on a place say in regional area?
YES, $25k to credit card debt. leave you $20k as a deposit for 2 x $50k regional properties.2) do I pay off some debt, keep some cash, use a deposit toward property
NO3) do I buy a property outright use income to pay off credit card plus my own income? Property would be positive in this instance.
NO4) use it as deposit for three or four regioanl properties and worry about credit card debt later?
NO5) pay it off my own mortgage and forget the rest? That then gives me more equity and reduces my monthly loan repayments…
NOany other thoughts?
cheers
Elves
” a blind man may see what a sighted man may not”
Kind regards
Chan Dollars
[Retire Young, Retire Rich] [strum]Hi Elves,
im big like you on the credit card debt, IMHO the credit card debt is always last on my mind, if you can still out perform your credit card debt through other investment vehicles, pay the debt later and make your other investment vehicles work harder…
if you cant do that, pay down a good size of the debt, were the debt repayments, can also work for you, but still have a good control over the debt…
…also you mentioned you owe a friend some money, if they dont need that money quite yet, use it to further, increase your investment vehicles for the time being, and then pay them out later on, from profits made from profits and still at the same time, be able to keep them happy…
Cheers,
sisThere is no doubt in my mind. Payout credit card debt. Put the rest into PPOR loan that is not tax deductible or onto investment loans if your PPOR is paid off.
Then see what money I can borrow from the bank and invest accordingly.
I agree with Yack, pay out your credit card debt first as they can charge upto 18% interest which would be pretty steep on 25k. Then put the remainder in your home loan as this isn’t tax deductable and will help to build up your equity..[biggrin]
Credit card debt sucks, pay it off and have a clean slate. The bank may even look at you in a different light![blink]
Then pay off your PPoR as much as you can. I know not everyone agrees (well they have so far), but I think it is the right thing to do. You can borrow more and you don’t need a deposit for an IP. I have never put one on a property, always borrowed 100% plus costs. You can still find an occasional +ve CF properties with high enough yields (15 – 16%) to support 105% borrowings.
‘Eat rich food, barbeque a yuppie’ [greedy]
You have 4 credit cards!!! That will impact your borrowing ability. Pay them off and cancel 3 of them. Stick the 20k in a mortgage offset until you find a suitable deal. If nothing looks good pay it off the mortgage or top up your superannuation while you wait for things to correct.
Thanks everyone. Listen credit cards are not all bad depending on how you use them.
I liek the idea of getting more positive properties which was the aim initially. I can repay credit cards like sis says, but I liek everyone thinks they are very costly, but I dont panic over that debt. Why?? because it can be reduced, and I think along the lines of sis,
yes friends can wait, i repaid 7k already. But I can always reborrow too![inlove]
yes I know I dont need to use a deposit, but I was looking at doing this to get the return and to minimise bank interference…lol
4 cards…nothing, but not needed you are right. I cancelled one and pay that off. My card limits were 20k 20k 9k,2, 2 then the pay in 21 days ones eg amex and diners. I reduced these to 13, 5, 5,2
I know they affect borrowing, but lets say my bank manger wasnt interested, cause he knew i had the means….lol
I also have the option of drawing funds from margin loan account thats around 6 something %. So at a pinch I can pay off the debt for under 7% using this. But I really kinda like using money to do things. eg buying more property or shares than paying off my debt.
Ok having said that, I have got a property, now it is just a case of using the money wisely..to maximise further potentials and not end up with nowhere to go.
thanks ALL for your input appreciate that, but feel free to add scenarios
elves
” a blind man may see what a sighted man may not”
The only comment I have re your use of the credit cards, elvces, is that you did a reno, which will most likely add to the value of your home. The IR is obvoiusly an issue, cause it’s big, but seems like you’ve used “bad debt” for good things!! :o)
I’d pay off the credit cards, and then think about what you might do with the 20k cash you have left. Deposit on a pozz cashflow property, perhaps?
kay henry
I go for paying off the card then get rid of it.Have a read of (Money Secrets Of The Rich )John R Burley.
So many +CF properties in Western Australia.Let me help you. And we can achieve a win win situation.Russ.0438 659 411
I would pay off the credit cards, as they effect your ability for getting new loans, as well as having to pay a much higher int. rate.
Then buy more properties…..
Rgds.
Lucifer_auHi Guys,
having a credit card debt to opposed to owing money on your credit card, will still be shown as a debt, even if there is no money owing on the cards.
Cheers,
sisSpot on SIS – doesn’t matter if you don’t owe a cent on the cards. Just having them impacts the lending equation negatively. Surely you don’t need that high a CC limit. Get a LOC or an overdraft facility.
Originally posted by Rugbyfan:I have never put one on a property, always borrowed 100% plus costs. You can still find an occasional +ve CF properties with high enough yields (15 – 16%) to support 105% borrowings.
You would have to have considerable equity or savings to get a 100%+ loan, no? Or is it the positive income alone? Pointers on how ot get such a loan would be very much appreciated.
JackFr,
You got to have enough equity to drawdown for new IPs by way of Cross-Coll or LOC.
Which meant you either borrow 105% as one loan doc using 2 securities for the loan or you borrow 80% for one loan using the purchasing property as a security and 25% from Line of Credit (LOC).
Kind regards
Chan Dollars
[Retire Young, Retire Rich] [strum]Originally posted by JackFr:Originally posted by Rugbyfan:I have never put one on a property, always borrowed 100% plus costs. You can still find an occasional +ve CF properties with high enough yields (15 – 16%) to support 105% borrowings.
You would have to have considerable equity or savings to get a 100%+ loan, no? Or is it the positive income alone? Pointers on how ot get such a loan would be very much appreciated.
Jack, you are correct in your 1st assumption. Lots and lots of equity in our PPoR. The positive income means we can borrow more but the reason we can get 105% in the first place is the equity.
‘Eat rich food, barbeque a yuppie’ [greedy]
Originally posted by elves:I think along the lines of sis,
yes friends can wait
elvesI disagree…
A friend has obviously done you a good deed and lent you money to assist you on your wealth creation journey. Now that youre in a position to return the money, why not do the moral thing and repay both the debt, and your friend’s kindness?
Jay.
Hi Jay,
i would agree and disagree, but honestly, if your friend wasnt too worried in you paying for the money now, and trusted you in good faith, i would honestly pay them later then…
while at the same time you can use their money to furhter increase your wealth, your also able at the same time to pay them back out of profits made from profits, and with this, still keep a strong friendship…
Cheers,
sisps.. it might be the moral thing to do, but some friends do have an understanding and are more the happy to help someone in their success… (as long as you pay them back… later on…)
Sometimes this forum genuinely surprises me with the diversity of approaches and ethics.
Any time I have owed parent / friend / sibling money it always always gets repaid before anything else (except a base mortgage on the PPOR – but this has never been in trouble).
My philosophy is that opportunities come and go but relationships are guaranteed to provide a positive return with a bit of effort. Plus, I would not feel comfortable making money while using funds of someone else without having them as a party…
Getting High on Opium (aka.. OPM)
Cheers,
sis
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