Can you cover an unexpected $400 expense?

[IronWing]

Let's just say that if I had a McLaren related emergency, I could buy a second McLaren with my emergency fund.

You got the ashtray, gross.

 

[Charmonium]

I have this super cool "friend" who has $110K @ 3.39% interest on a car loan and $270K @ 4.5% interest on a mortgage.

Now logically he should pay off the higher interest rate first, but since it's a mortgage, isn't the interest on it tax deductible? Which should my ridiculously good-looking friend pay off first?

Didn't the new tax law change that? It was supposed to be punishment for the blue states since the cost of housing tends to be higher there and losing the deduction would cost people more.

 

[allisolm]

Didn't the new tax law change that? It was supposed to be punishment for the blue states since the cost of housing tends to be higher there and losing the deduction would cost people more.

AFAIK mortgage interest is still deductible on a primary residence up to a $750,000 loan.

 

[nOOky]

I think it depends on the situation.

If you have three accounts that are fairly equal (let's say $1200, $1400, $1000) of course you pay the highest interest first, even if it's the biggest.

If you have four accounts and one is much higher than the other three (lets say $500, $1100, $800, $7200) then you pay the small ones first regardless of interest rate to free up the cash from that monthly payment. A lot more people fall into this pattern than you'd think.

Ideally whichever method you choose, if you can just get into the frugal mindset of even starting to pay debt off and not piss away money and stick to a budget you'll be so much farther ahead. As mentioned there is a psychological aspect of paying off those smaller debts and then freeing up that money to pile on to the larger debts. As debt goes down and you start to save some money even it really gives you a boost to keep going, and when you become debt-free it's really a good feeling to see that spare money go into the bank because it starts to pile up fast.

Understandably it is hard for many people depending on their income and kids or housing expenses etc. but if you never buckle down and pinch those pennies you'll never get anywhere, who likes that feeling of working for nothing...

 

[sdifox]

AFAIK mortgage interest is still deductible on a primary residence up to a $750,000 loan.

Yeah no, I don't see why your willingness to take on more debt should result in higher taxes for me.

 

[dasherHampton]

Ideally whichever method you choose, if you can just get into the frugal mindset of even starting to pay debt off and not piss away money and stick to a budget you'll be so much farther ahead. As mentioned there is a psychological aspect of paying off those smaller debts and then freeing up that money to pile on to the larger debts. As debt goes down and you start to save some money even it really gives you a boost to keep going, and when you become debt-free it's really a good feeling to see that spare money go into the bank because it starts to pile up fast.

Understandably it is hard for many people depending on their income and kids or housing expenses etc. but if you never buckle down and pinch those pennies you'll never get anywhere, who likes that feeling of working for nothing...

Yup. If a person doesn't change the fundamentals behind the problem it won't go away.

As I said before - interest isn't the biggest issue in these situations, bad financial behavior is. And, in the end - that is what this thread is really about.

 

[highland145]

AFAIK mortgage interest is still deductible on a primary residence up to a $750,000 loan.

Yeah but the standard deduction is $24K for a couple. I know some of the ballers here have that much in interest payments a year but most don't....I hope.

Yeah no, I don't see why your willingness to take on more debt should result in higher taxes for me.

That's what I said to those people in high tax states when the new tax plan capped deductions at $10K, they weren't appreciative.

 

[lxskllr]

My unexpected expense of the day: Went to Carolina fresh to get fertilizer. They sell sod/dirt/bark/etc...Well, my dumb ass cut the corner too close and hit the concrete barrier. Tore up the back door and the frame below it, ripped off the rear tire fender and bent the bed a little (Toyo Tacoma). $4K "should" cover that. Crap.

Bang everything back in place with a hammer, and enjoy your new care free work truck, free of charge. No worries from now on. Thrash it in the brush? No problem. Some asshat playing chicken? Bring it on! What are you gonna do to this?! It's a life without worries. This should be in the first world triumph thread ;^)

 

[allisolm]

My unexpected expense of the day: Went to Carolina fresh to get fertilizer. They sell sod/dirt/bark/etc...Well, my dumb ass cut the corner too close and hit the concrete barrier. Tore up the back door and the frame below it, ripped off the rear tire fender and bent the bed a little (Toyo Tacoma). $4K "should" cover that. Crap.

 

[Mayne]

you know you need to make little back up manoevers ..picture a tight mcdonalds drive thrue.

 

[sdifox]

Bang everything back in place with a hammer, and enjoy your new care free work truck, free of charge. No worries from now on. Thrash it in the brush? No problem. Some asshat playing chicken? Bring it on! What are you gonna do to this?! It's a life without worries. This should be in the first world triumph thread ;^)

Did you take out a payday loan?

 

[highland145]

Bang everything back in place with a hammer, and enjoy your new care free work truck, free of charge. No worries from now on. Thrash it in the brush? No problem. Some asshat playing chicken? Bring it on! What are you gonna do to this?! It's a life without worries. This should be in the first world triumph thread ;^)

Well, ..., I don't have a pet spider.

Thanks, A. sad panda

you know you need to make little back up manoevers ..picture a tight mcdonalds drive thrue.

pics of your ...anything besides a trike.

Anything.

Did you take out a payday loan?

Not yet but I can't be riding around hoopti and all.

 

[fleshconsumed]

I have this super cool "friend" who has $110K @ 3.39% interest on a car loan and $270K @ 4.5% interest on a mortgage.

Now logically he should pay off the higher interest rate first, but since it's a mortgage, isn't the interest on it tax deductible? Which should my ridiculously good-looking friend pay off first?

Depends on his top tax bracket, how much he's actually putting towards principal and how much towards interest (only interest is deductible), how much are his property taxes. New SALT limits in 2018 law might also have an effect. To be honest, at these numbers it's probably going to be about the same.

AFAIK mortgage interest is still deductible on a primary residence up to a $750,000 loan.

It is, but it limited to 10K for SALT now.

 

[Red Squirrel]

Wait, how does mortgage interest and tax deductions work? Is there something like a mortgage statement I should be giving to my tax person? First time I hear about it being tax deductible. Or is that something that happens automaticly in the background with your pay cheque?

 

[dasherHampton]

No, you have to claim it. You should get a mortgage summary statement from your bank every year.

 

[fleshconsumed]

Wait, how does mortgage interest and tax deductions work? Is there something like a mortgage statement I should be giving to my tax person? First time I hear about it being tax deductible. Or is that something that happens automaticly in the background with your pay cheque?

Quick google says Canadians cannot deduct mortgage interest. Ask fellow canucks.

 

[Herr Kutz]

Yes, I just bought a new iPhone 8 which was an unexpected expense.

 

[rommelrommel]

Quick google says Canadians cannot deduct mortgage interest. Ask fellow canucks.

We cannot. It sucks.

 

[yhelothar]

38.1% of Americans carry credit card debt. It makes sense that those same people couldn't afford an unexpected $400 without borrowing. If they had the savings lying around, they would use it to pay off their credit card.

 

[sdifox]

Wait, how does mortgage interest and tax deductions work? Is there something like a mortgage statement I should be giving to my tax person? First time I hear about it being tax deductible. Or is that something that happens automaticly in the background with your pay cheque?

American, not Canadian tax.

 

[Red Squirrel]

Oh I see, I thought I may had been missing out on something. Though I think you can actually retro up to 10 years so that would have been one hell of a chunk of cash.

 

[Exterous]

Yeah no, I don't see why your willingness to take on more debt should result in higher taxes for me.

Because owning a home is a key part of The American Dream and that deduction is deeply embedded in most tax/voting brackets. If people are having a hard time coming up with $400 they're not going to want to lose out on hundreds of dollars of a tax refund

 

[zinfamous]

Aluminum was used in the 60's and early 70's as a cheap alternative to copper.

Ah that's right, I got the decades mixed up. It was the ~60s/70s houses that I was looking for the Cu-Al switches.

 

[zinfamous]

It's pungent, you don't really want to smell it.

I am doing it more as a science project, going to use rpi and ardruino to build fully automated growth pods.

dude, hook a brotha up.

 

[zinfamous]

Alright old timer, please explain in detail - as to why that would be better. Go on. I'm waiting.


<Hint: The answer is that you have no answer, because it is blatantly wrong. Please quit spreading misinformation, we're trying to make the world population smarter, not dumber.>

lol you always get so fucking angry for no reason.