2018 Debt Update

"Wobbles the Mind" (wobblesthemind) 01/05/2018 at 11:23 • Filed to: Finances

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2018 Genesis G70

Here is where I’m at with debt starting out 2018:

XF: $25,644

WK2: $19,624

Personal Loan: $4,530

Student Loans: $2,927

*** Total Debt: $52,725 ***

Blue Book Values:

XF Value: $15,000

WK2 Value: $7,000

Amanti Value: $500

***Total Asset Value: $22,500 ***

The goal is to trim away this $30,225 difference as quickly as possible and become debt neutral . There is still the likelihood of grabbing a CTS Sport Wagon for around $8,000 to $12,000 at any point. Either way, it looks as if it will be about 2020 by the time I’m debt neutral and 2022 for me to be debt free if I kept up the same lifestyle.

But of course there will eventually be a house in there so between the debt and the asset value I’ll probably be over the $50,000 total even if I were debt free.

What have I learned?

Much like when I realized it isn’t about how much I make but how much I keep, I am switching my focus from being debt free to asset positive .

I know, simple stuff but changing financial focus completely changes the way you go about handling the whole adulting thing. Covering the difference is the new motto. We shall see how that plays out.

**Edit: But that, “how much you keep,” part still applies. I need to keep as much as I can. I need cars payments to be like insurance payment options. I need to have the ability to throw $5,400 and be covered for a year of payments instead of $450 a month. It’s the same financial end but the lifestyle completely changes when you have an “extra” $450 every month. It’s weird to explain but Ill work it out.

Yowen - not necessarily not spaghetti and meatballs > Wobbles the Mind 01/05/2018 at 11:35

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Yeah, this becomes even more so the case once you own a house and have retirement funds, it just isn’t realistic to be debt free, unless you have a major windfall.

Based on the numbers it doesn’t even make sense for me to pay extra to the principle of my home, given the interest rate on that is somewhere below 4% and retirement funds (based on historical expectations) will return around 7%. So unless you are fully taking advantage of your tax advantaged contributions ($16k 401k and $5500 for IRA’s, yearly limits), there isn’t much of a point, especially if you haven’t met you retirement goal yet.

The real goal is to get out of consumer debt, credit cards, cars, personal loans. Home loans and student loans are “good” debt. Although I do recommend getting yourself out of student debt. The hurry in which you are to do this heavily depends on the interest rate.

Ultimately my financial focus is to be working toward a secure retirement and to have positive cash flow MOST months of the year. For me I’m to the point where mostly the only time this doesn’t happen is when my semi-annual car insurance payment is due.

Dru > Wobbles the Mind 01/05/2018 at 11:38

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How did you wind up so upside down on your auto loans?

I figured the other day that I have a net worth of about 100K. Which made me happy. But I like your comment about being asset positive. Debt isn’t black and white, nor is it always bad.

MasterMario - Keeper of the V8s > Wobbles the Mind 01/05/2018 at 11:49

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We actually went over this recently with our financial advisor and I was pleasantly surprised to find that even with our home loan we actually have a positive asset to debt ratio.

Wobbles the Mind > Dru 01/05/2018 at 11:52

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Long loans, low payments, and a love of cars that depreciate quickly. The usual but the time underwater is 36 months total (18 months left now), so it was equivalent to a lease on a stripped brand new 2012 Cayman.

Wobbles the Mind > MasterMario - Keeper of the V8s 01/05/2018 at 11:56

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Ah yeah! That’s where I want to be when I’m a homeowner.

OPPOsaurus WRX > Wobbles the Mind 01/05/2018 at 12:01

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yea, my house mortgage is $ fuckyoulots

I know we have some left on the minvan and thats about it. if I even get the kitchen/dining/living room done that work which will probably end up costing about $3-4k will increase the value of the house by maybe $15k. I wanna say we put $100k down on the house from the sale of the last house. so while my bank account is miserable, I do have decent assent value.

davesaddiction @ opposite-lock.com > Wobbles the Mind 01/05/2018 at 12:23

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Keep cranking! You’ll get there. Thanks to some very fortunate events related to my job in the last couple years, we were completely debt free for a hot minute last year, and then bought a new home. Our old one’s under contract now, so there’s potential that we’ll be completely debt free again by the end of this year, and if not by then, in the next few. It was a truly great feeling to have no debt hanging over us, and I’m looking forward to feeling it again!

Yowen - not necessarily not spaghetti and meatballs > MasterMario - Keeper of the V8s 01/05/2018 at 12:36

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A town house next to me, that’s nearly identical recently sold for $50k more than I paid for mine a year ago! Why nearly identical? Mine is an end unit, so it’s worth even more I’d imagine!

But yeah, buying a house, with zero down, on the day you buy it you are asset neutral, if you paid what it’s worth. Put a down payment on it (as one should) and you even have positive equity.

Yowen - not necessarily not spaghetti and meatballs > OPPOsaurus WRX 01/05/2018 at 12:39

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you are thinking a 3 to 4k investment will return ~11k? Or is there also some appreciation going on in your local market?

Wobbles the Mind > davesaddiction @ opposite-lock.com 01/05/2018 at 12:40

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I keep you in mind since debt free with a home is exactly where I want to be. Even a hot minute is a world of experience when you’ve only eaten your poptarts cold. That’s what Ghandi said anyways.

B_dol > Wobbles the Mind 01/05/2018 at 12:42

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Keep it up! In a similar spot - started with $97K in student loan debt in 2012, $36K left to payoff still. Hoping to erase that before the end of 2019.

Often hard to stay the course, but doing my best to enjoy life and not live off ramen just to pay things off a year earlier.

MasterMario - Keeper of the V8s > Yowen - not necessarily not spaghetti and meatballs 01/05/2018 at 12:57

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Yea we only put 10% down and put a bunch of work and money into it over the next year then got it reappraised at 25% higher and got pmi removed. Then we paid off my wife’s auto and student loans last year. Only one more loan besides the home loan to go now.

Yowen - not necessarily not spaghetti and meatballs > MasterMario - Keeper of the V8s 01/05/2018 at 13:06

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That’s awesome. After I finish my kitchen (and perhaps add AC) I should be able to get an appraisal that will get my PMI removed. Other than that all I have is a less than $3k left on a car. It’s so exciting to see the end of debt in sight! Except for the house of course, but that’s a necessary one that you can’t just get yourself out of in a few years, haha.

MasterMario - Keeper of the V8s > Yowen - not necessarily not spaghetti and meatballs 01/05/2018 at 13:12

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I know right...I need some unknown rich aunt or uncle to die and leave me their fortune.

OPPOsaurus WRX > Yowen - not necessarily not spaghetti and meatballs 01/05/2018 at 13:25

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$3-4k in materials and my time. I put probably $50k into my last house. I bought it for $235k and sold for $375k however there was some market appreciation with that one but that was only over 5 yrs.

OPPOsaurus WRX > Yowen - not necessarily not spaghetti and meatballs 01/05/2018 at 13:32

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i did plans for a condo development. They wanted 9 units in 3 buildings but it is one 5 unit building and two 2 unit buildings. we were trying to explain the cost savings by doing 4 two unit buildings and the added value to having 8 end units instead of 6 end unites with 3 middle units. they just saw that 9>8 and went with that.

Yowen - not necessarily not spaghetti and meatballs > MasterMario - Keeper of the V8s 01/05/2018 at 13:33

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it’s morbid to think about what you’ll get from a relative passing away, but also it would be very convenient.

Yowen - not necessarily not spaghetti and meatballs > OPPOsaurus WRX 01/05/2018 at 13:34

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yeah, it’s amazing what time is worth. I did about a $12k kitchen remodel and I did a majority of the labor, having a contractor handle it was quoted at $35k+

Yowen - not necessarily not spaghetti and meatballs > OPPOsaurus WRX 01/05/2018 at 13:56

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I would love to see in an alternate universe how the 8 unit plan would’ve worked out. Could actually end up exactly the same. But with else upfront cost.

OPPOsaurus WRX > Yowen - not necessarily not spaghetti and meatballs 01/05/2018 at 14:01

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you have to build the 9th unit, so there is additional costs, the end units per sq ft are worth more with 3 walls containing windows instead of just 2. The site would have more open space instead of being more crowded. 2 unit buildings do not have to be sprinkled, where as that 5 unit building does. cconstruction would have been streamlined building 1 building 4 times instead of different types of buildings.

Yowen - not necessarily not spaghetti and meatballs > OPPOsaurus WRX 01/05/2018 at 14:09

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Yeah, sounds like there are lots of advantages to the 8 unit plan. Especially the fact that you can build them all the same. The sprinkler thing also seems like a good one, I know my aunt and uncle’s condo had to have a separate phone line for the sprinkler system too. Who even wants one phone line these days?

davesaddiction @ opposite-lock.com > Wobbles the Mind 01/05/2018 at 14:12

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Haha!

Captain of the Enterprise > Wobbles the Mind 01/05/2018 at 14:14

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Congrats on getting so low on the student debt!

OPPOsaurus WRX > Yowen - not necessarily not spaghetti and meatballs 01/05/2018 at 14:19

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yea, it would have made for a much better project. The massing of the buildings would have fit int he neighborhood better as well. As I’ve been renovating I’ve been ripping the phone lines out. We have a house phone number but no phone. the only reason we have one is because it was cheaper to get the triple bundle then just cable/internet.

merged-5876237249235911857-hrw8uc > davesaddiction @ opposite-lock.com 01/05/2018 at 14:23

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If you’re down to just a house as your debt. Then you’re doing well. Typically the house won’t depreciate so you could theoretically sell it off and be debt free. But even if not, that’s not too bad at all.

merged-5876237249235911857-hrw8uc > Wobbles the Mind 01/05/2018 at 14:25

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It took my wife and I about three years to pay off the debt I brought with me, about the same as you are looking at, so it can be done. It just takes time and discipline. Sounds like you have the right idea. Keep at it.

Yowen - not necessarily not spaghetti and meatballs > OPPOsaurus WRX 01/05/2018 at 14:32

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Their insistence on these triple bundles roughly a decade ago was a major motivator for me to just say “screw you cable” and I now only buy internet, turns out I was just ahead of my time and that I was an early “cord cutter”.

OPPOsaurus WRX > Yowen - not necessarily not spaghetti and meatballs 01/05/2018 at 14:36

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yea, i’m trying to figure out what to do, I was thinking going to just internet and getting amazon prime so I can stream from that. The kids still need TV of some sort.

Yowen - not necessarily not spaghetti and meatballs > OPPOsaurus WRX 01/05/2018 at 15:38

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Yeah figure out which of the services offers something they’ll like: Prime, Netflix, Sling, Hulu, Youtube, etc etc. For kids there may be a surprising amount of free stuff out there too.

Pro tip: if you know any close family member willing to do a password trade for an xfinity tv login, those are gold! Especially if they have a lot of channels in their cable package. I did this trade for a login to my netflix account for them.

davesaddiction @ opposite-lock.com > merged-5876237249235911857-hrw8uc 01/05/2018 at 21:14

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Oh, for sure, but having no mortgage payment is pretty awesome!

Dr. Zoidberg - RIP Oppo > Wobbles the Mind 01/05/2018 at 21:54

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That student debt... I’d kill for those figures.

Ouch on that Jag, though.

merged-5876237249235911857-hrw8uc > davesaddiction @ opposite-lock.com 01/05/2018 at 22:55

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Heck yeah it is. We’re within 5 years of paying our home off, but now that we’re awaiting our 4th child, we’re pretty well out of space here, so time to start all over again, but at least we have a good amount of equity in our current home. Kind of a bummer, but I can’t complain.