Updated over 8 years ago on . Most recent reply
The Shell Game - Pay off Debts or Invest?
I'm trying to take the approach of having my money work for me instead of the other way around. The struggle, however, is balancing what looks good on paper with what I want to do; being disciplined and careful, but not resentful if I can't jump on an opportunity.
It's like Dave Ramsey and Robert Kiyosaki are having a fight in my head. You should have your money work for you. You should pay off your debts and live debt-free. You could borrow money from people to make asset purchases. Don't spend money you don't have. AHHHH!
Would love to hear some feedback/opinions on this brain dump...
Goal
To have investment income replace my W2 income. Here's where it gets all chicken-or-egg in my head: If I pay off the credit cards and student loans (even partially), I need less income to cover my expenses. But then I'll probably have to wait to invest and make the switch to FT REI. As I said, I'm not a very patient person; once I know I want something, I go after it.
Why
I want my hard work to benefit me and my family, not some shareholders. I've known that I'm not meant for the corporate hamster wheel for a decade, but have ignored that little voice in my head because I was taught that going to college and joining cubicle life is what you're *supposed* to do.
Debts
$30k in student debt at no more than 6% interest (most under 4%)
$15k in credit card debt at no more than 13.5% interest
12% of my gross income going to 401(k) with no match
Primary residence payment is 15% of gross household income
No car payments; none planned
Assets
Cashed-Out on equity of Duplex #1 to purchase Duplex #2 and to improve cash flow on #1
Purchasing and renovating Duplex #2 to increase monthly cash flow
Expect to have $15-20k in remaining funds after #2 purchase/reno
$25k in an untouchable (per hubs) "Oh Sh*t" fund
$7k in stocks that could be liquidated
Disclaimer
Credit card debt was due to two back-to-back major unplanned primary residence expenses when we were only on one income. Our monthly spending is under control and we are trying to figure out how to apply the excess we now have - bills or investments?
Questions
1. What to do with that $15-20k left over from the refi/purchase... Pay off credit cards? Apply to new asset/property? Re-invest in current properties to increase cash flow?
2. What to do with our cash flow (est. $6-700/mo)? Save for next property? Debt repayment?
3. What to do with our current monthly excess? Save for next property? Debt repayment?
Looking forward to some BPer insights!
Most Popular Reply
Pay off the credit card debt. That's a no brainer to me. If you can guarantee a better than 13.5% on that 15k then let me know so I can do the same.