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Durkin Tactical Franklin Armory
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Posted: 5/21/2022 3:00:52 PM EDT
I have about $25k in expenses coming up.  Liquid cash is tight for a few months due to just buying a house and planning a cross country move.

I can:
- Cash out I bonds (currently paying over 9 percent)
- Sell stocks (which will create a large taxable gain)
- Take out a personal loan at about 6 percent interest

Normally I shy away from personal loans but in this case, it seems like a better deal to leave the cash sitting in I bonds for 9 percent return and borrow the cash at 6 percent.

Thoughts?
Link Posted: 5/21/2022 5:24:47 PM EDT
[#1]
My first thought would be option 3.  How long would it take to repay the loan?  Are you just fronting yourself a bridge loan to get where you need to be?  I loaned my son 40k for a month to sell his house and move into his new house.  Is this a somewhat similar situation where you will get the money back in a relatively short period of time?
Link Posted: 5/21/2022 8:13:44 PM EDT
[#2]
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Quoted:
My first thought would be option 3.  How long would it take to repay the loan?  Are you just fronting yourself a bridge loan to get where you need to be?  I loaned my son 40k for a month to sell his house and move into his new house.  Is this a somewhat similar situation where you will get the money back in a relatively short period of time?
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We will be a little tight on liquid capital until our current house sells (should be by September).  Then we will be fine.

Personal loan terms are up to 36 months with no prepayment penalty.

I'm just having a hard time cashing out I bonds that are making 9 percent when I can borrow money for less than that!
Link Posted: 5/21/2022 8:14:25 PM EDT
[#3]
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Quoted:
My first thought would be option 3.  How long would it take to repay the loan?  Are you just fronting yourself a bridge loan to get where you need to be?  I loaned my son 40k for a month to sell his house and move into his new house.  Is this a somewhat similar situation where you will get the money back in a relatively short period of time?
View Quote


We will be a little tight on liquid capital until our current house sells (should be by September).  Then we will be fine.

Personal loan terms are up to 36 months with no prepayment penalty.

I'm just having a hard time cashing out I bonds that are making 9 percent when I can borrow money for less than that!
Link Posted: 5/21/2022 8:17:07 PM EDT
[#4]
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Quoted:


We will be a little tight on liquid capital until our current house sells (should be by September).  Then we will be fine.

Personal loan terms are up to 36 months with no prepayment penalty.

I'm just having a hard time cashing out I bonds that are making 9 percent when I can borrow money for less than that!
View Quote


Just out of curiosity, how long would it take you to save 25k if you used the bond money?
Link Posted: 5/22/2022 12:08:49 PM EDT
[#5]
Update:  Got the idea on another forum to look at 0% interest promo credit cards.  Got a few offers in hand then approached Amex and asked them what they could do with one of my existing cards.  They were happy to slap a 0% interest rate on one of my cards for a year with a limit of $25K.   Took about 5 minutes using their online chat tool.  We will just throw all the big expenses on there and then pay it off either next tax year (when I can liquidate some additional assets without tax consequences) or after the house sells.

How long to save $25K?  It depends on if you count retirement accounts.  If you include retirement accounts then easily under a year, but that's a "lumpy" investment as we usually do big lump sum contributions to max out the Roth IRAs once a year (plus monthly contributions into 401K/traditional accounts).  In taxable accounts we stashed about $10K-20K/year towards a down payment over the past few years while also maxing out retirement and saving for car replacements.  Not a millionaire with a moon lambo or a DINKS household, just fairly high personal savings rates.

We have plenty of resources in taxable accounts right now, the issues are:
1)  Selling equities will come with a big tax hit (probably enough capital gains to push us up into the 15% cap gains bracket for the year) and
2)  Selling I bonds when they're making >9% interest would make me sad, especially as you can only contribute $10K/year.

We already burned through a bunch of liquid cash for a larger than expected down payment on a home as well as almost $10K in unexpected vehicle repairs and budgeting for the expenses associated with a cross-country move (probably looking at several K in gas alone).  The house was a bit of a fixer upper, and we got the seller to make concessions (they came down on price, which is frankly a shock in this market) but we still need to come up with cash in hand today to pay for the repairs.  Nothing extravagant, we're talking leaky windows, electrical, insulation -- boring stuff like that.
Link Posted: 5/22/2022 9:21:24 PM EDT
[#6]
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Quoted:
Update:  Got the idea on another forum to look at 0% interest promo credit cards.  Got a few offers in hand then approached Amex and asked them what they could do with one of my existing cards.  They were happy to slap a 0% interest rate on one of my cards for a year with a limit of $25K.   Took about 5 minutes using their online chat tool.  We will just throw all the big expenses on there and then pay it off either next tax year (when I can liquidate some additional assets without tax consequences) or after the house sells.
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Read the fine print and ensure that it's not a 0% interest rate as long as the card is paid off after a year, and if it's not you get charged all the interest back to day 1.
Link Posted: 5/22/2022 11:16:06 PM EDT
[#7]
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Quoted:

Read the fine print and ensure that it's not a 0% interest rate as long as the card is paid off after a year, and if it's not you get charged all the interest back to day 1.
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Yup, its a clean 0%.  Purchases start accruing interest after the last freebie billing rate with no "snapback."  Only real limitation is I can't get the 0% rate on cash advances, balance transfers, gift cards, or other cash equivalents.

I don't intend to ever pay a cent of interest on this anyways.    Just need something to bridge into next calendar year.
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