Greetings,
First, I'm a total fan of the milliondollarjourney website. Thanks for the ton of information and continuing updates.. Now, to the meat.. we're implementing the SM, or at least our version of it since it seems to be pretty custom to each person, and I just want to make sure I have this nailed down step by step, so here goes with roughly our example.
(some values edited to simply make this easier to do the math on.
So, here goes..
We have a 120k HELOC setup at 2.5%/a. Mortgage is locked at 5.79%.
We’ve pulled 100k of that into investment bonds returning 15%/a, paying out quarterly. Our first quarter payment came in and it was only 2 months worth, so we held that in the tracking account to pay the HELOC interest costs. I’m debating whether or not I should “capitalize” that interest by pulling that money back out of the HELOC, and getting back up to the original $2500, or just leave it at the eroded amount.
Now, our second interest payment has arrived, and I’m ready to get this into full swing and make a mortgage payment. So, assuming I capitalize that interest, I’ll have $6250 in the tracking account. So, I’m thinking I withold the 40% for tax, make a mortgage payement of $3750, pull 10k out of the heloc and reinvest it, and go on my merry way till next quarter. Rinse, repeat.
All the while, we’re still making our accelerated payments of $700 into the mortgage.
So, do I have this on track? Any suggestions on how to improve it?
Thanks!
Jim
First, I'm a total fan of the milliondollarjourney website. Thanks for the ton of information and continuing updates.. Now, to the meat.. we're implementing the SM, or at least our version of it since it seems to be pretty custom to each person, and I just want to make sure I have this nailed down step by step, so here goes with roughly our example.
(some values edited to simply make this easier to do the math on.
So, here goes..
We have a 120k HELOC setup at 2.5%/a. Mortgage is locked at 5.79%.
We’ve pulled 100k of that into investment bonds returning 15%/a, paying out quarterly. Our first quarter payment came in and it was only 2 months worth, so we held that in the tracking account to pay the HELOC interest costs. I’m debating whether or not I should “capitalize” that interest by pulling that money back out of the HELOC, and getting back up to the original $2500, or just leave it at the eroded amount.
Now, our second interest payment has arrived, and I’m ready to get this into full swing and make a mortgage payment. So, assuming I capitalize that interest, I’ll have $6250 in the tracking account. So, I’m thinking I withold the 40% for tax, make a mortgage payement of $3750, pull 10k out of the heloc and reinvest it, and go on my merry way till next quarter. Rinse, repeat.
All the while, we’re still making our accelerated payments of $700 into the mortgage.
So, do I have this on track? Any suggestions on how to improve it?
Thanks!
Jim