Pay down debt but decrease income?

Pay down debt but decrease income?

Joined: May 20th, 2006, 8:47 pm

April 26th, 2012, 1:31 pm #1

if you could decrease your debt significantly but lose income significantly would you do it?
I am struggling with this with a real estate sale.

karen
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Joined: May 21st, 2006, 4:46 am

April 26th, 2012, 1:44 pm #2

...in general, I think you are always better off without the debt. JMHO.
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Joined: October 28th, 2005, 10:05 am

April 26th, 2012, 5:00 pm #3

if you could decrease your debt significantly but lose income significantly would you do it?
I am struggling with this with a real estate sale.

karen
Is the debt bigger then the loss of income? If so I would do it....
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Joined: May 20th, 2006, 8:47 pm

April 26th, 2012, 10:07 pm #4

the loss of income would be $400 per month, $4800 per year. but the decrease in debt would be $250,000. it is a int. only at prime (3.25%)
K
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Joined: May 21st, 2006, 4:46 am

April 27th, 2012, 2:05 am #5

I would either cut my budget by $400 or figure out how to increase my income by $400. Getting rid of $250,000 worth of debt (even business debt) would far outweigh that. Getting out from under that debt is the forest--$400 is just the trees.
Last edited by MaxineS on April 27th, 2012, 2:06 am, edited 1 time in total.
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Joined: October 28th, 2005, 10:05 am

April 27th, 2012, 10:54 am #6

I would get out from under it as fast as I could.
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Joined: May 28th, 2006, 3:48 am

April 27th, 2012, 11:51 am #7

the loss of income would be $400 per month, $4800 per year. but the decrease in debt would be $250,000. it is a int. only at prime (3.25%)
K
A $400 profit every month after you cover the mortgage, taxes and maintenance doesn't seem bad to me. But there's always the risk that you get a bad tenant. If you knew for sure you had a great tenant I would keep it. But that's a big if. Also, what would the sale be like? Could you make a profit on it that would be equal to a few year's profit at renting?
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Joined: June 5th, 2006, 5:33 pm

April 27th, 2012, 2:57 pm #8

Never mind - I didn't read your response correctly. nt
Last edited by TxNet on April 27th, 2012, 6:37 pm, edited 1 time in total.
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Joined: May 25th, 2006, 12:07 am

April 27th, 2012, 5:20 pm #9

if you could decrease your debt significantly but lose income significantly would you do it?
I am struggling with this with a real estate sale.

karen
If that is $400 clear profit and it is paying for itself in rent, and the rental market is good in your area I don't think it matters how much debt you have. It is debt that is paying for itself, you know? It's not just credit card debt or whatever. Unless there is some other reason (besides debt) to get rid of it, I would keep it.
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Joined: May 20th, 2006, 8:47 pm

April 29th, 2012, 11:53 pm #10

first of all for realizing it is business debt, not functioning as personal debt.

my general plan is to wait until the house the debt is attached to finally sells, then use the bulk of it to pay down this loan. although it is cash flowing, the concern is the rate is tied to prime, and it wouldn't take a big increase to have the rent not cover it as well.

the other thing though, is how maybe I can take the same debt ($680 per month) and get it against a higher producing property. I can also roll it to a permanent mortgage if I want in the future.

so, using the current property under contract to pay down debt and keep working for me.


thanks everyone for all the good input, I value it.


karen






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