Money Question????????

[ARCHIVED THREAD] - Money Question????????

Posted: 5/11/2002 6:21:50 PM EDT

I am going to be seeing a settlement from an accident pretty quick. I could have around $30K left after I pay off all my revolving credit, school loan, and medical bills(not related to accident).

My question is what should I do with what is left? Immediately it will go into a savings account, but I need to be prudent with it.

I am going to become a paying member of AR15.com, but I can't think of what else I should do.

I don't own a house, and my 2 car payments total $700 for 1 decent and 1 nice vehicle. I don't know that I want to settle down in Colorado, so buying a house right now is not close to the top of my list. I could pay off my vehicles and still have $5k left, plus saving a grand a month would be no problem.

I have toyed with the idea off going back into business for myself again, doing network consulting for med/small business, so the 30K would help out in the start up phase.

I have always wanted to have my own gunshop too, but I don't think 30K would go very far, and a start up would take some time before I could draw a salary.

So, what do you think?

Posted: 5/11/2002 6:25:54 PM EDT

[#1]

if it's "free money" i'd suggest land. In the right area you can pick it up cheap and turn it around for a decent profit in a few years.

Posted: 5/11/2002 6:30:13 PM EDT

[#2]

Quoted:
if it's "free money" i'd suggest land. In the right area you can pick it up cheap and turn it around for a decent profit in a few years.

View Quote

I was seriously considering a range but after seeing that and indoor range with outdoor range would run about $1.2 million I decided that unless I could attract investors, it wouldn't happen.

If you are going to be at the BRC, I would like to buy you a beer for being the first reply.

thanks

Posted: 5/11/2002 6:37:54 PM EDT

[#3]

[url]http://www.amazon.com/exec/obidos/ASIN/0764551620/ref%3Dpd%5Fsim%5Fbooks/103-3400463-1404613[/url]

No flame intended - just a darn good place to start.

Posted: 5/11/2002 6:44:54 PM EDT

[#4]

Quoted:

Quoted:
if it's "free money" i'd suggest land. In the right area you can pick it up cheap and turn it around for a decent profit in a few years.

View Quote

I was seriously considering a range but after seeing that and indoor range with outdoor range would run about $1.2 million I decided that unless I could attract investors, it wouldn't happen.

If you are going to be at the BRC, I would like to buy you a beer for being the first reply.

thanks

View Quote

Thanks for the offer but i won't be able to make it. Perhaps next year! If you ever get down this way let me know!

mike

Posted: 5/11/2002 6:54:02 PM EDT

[#5]

Quoted:
[url]http://www.amazon.com/exec/obidos/ASIN/0764551620/ref%3Dpd%5Fsim%5Fbooks/103-3400463-1404613[/url]

No flame intended - just a darn good place to start.

View Quote

no flame taken [:D]

I have recommended the Dummies series books to lots of people, didn't think about it myself.

thanks

Posted: 5/11/2002 6:54:55 PM EDT

[#6]

Don't pay off the cars, why dump 30k into cars that will be worth 5k in a few years. Save or invest it, stocks...solid blue chips or a CD. You should be looking to use it to put a down on a house someday, no better investment than that [:D]

Posted: 5/11/2002 7:05:53 PM EDT

[#7]

Quoted:

You should be looking to use it to put a down on a house someday, no better investment than that [:D]

View Quote

Good point here. If you can plop down 20% (I'm fairly sure that is the figure), you won't have to pay your monthly PMI which adds up to a tidy figure in savings.

Posted: 5/11/2002 7:36:38 PM EDT

[#8]

Interest on CD's and other "safe" investments is at an all time low right now. I would suggest paying off the cars, and trying to get debt free. Or you could just buy a really cool gun collection.

Posted: 5/11/2002 7:54:14 PM EDT

[#9]

Guys,

all good points, The idea of being debt free is really appealing. If I were to pay off the vehicles, that is exactly where I would be.

choices,
choices,
choices.....

Posted: 5/11/2002 8:00:04 PM EDT

[#10]

I'd pay off ALL my debts.

Posted: 5/11/2002 8:08:29 PM EDT

[#11]

Charity is the milk of human kindness.

Perhaps you could help me pay off some of [b]my[/b] debt. [;D]

[size=6]Got milk?[/size=6]

Posted: 5/11/2002 8:09:49 PM EDT

[#12]

Quoted:
Don't pay off the cars, why dump 30k into cars that will be worth 5k in a few years. Save or invest it, stocks...solid blue chips or a CD. You should be looking to use it to put a down on a house someday, no better investment than that [:D]

View Quote

Good advice (although houses often underperform the stock market v. renting and investing the difference over time-in my untrained opinion-depending on the local real estate market-of course). All too often guys get settlements and blow 'em. You will probably never have a one time non taxable windfall again like this in your life. I'd invest it and leave it alone to make money for you. You would have to pay off your cars anyway-do that out of your regular income, not this money.

I actually saw a guy go through a $ 650k settlement (net to him). Far too many guys buy a Harley or just go through it and have nothing left at the end.

Squirrel it away unless you are VERY confident of your proposed business venture.

Or buy me a Subaru WRX.

And one of those cool FBI hostage rescue team .45's from Springfield Armory.

Posted: 5/11/2002 8:43:22 PM EDT

[#13]

thanks guy's, I will check back in the morning.

dave

[sleep]

Posted: 5/11/2002 9:29:31 PM EDT

[#14]

"Dude! You're getting a house!". Seriously though, buy a house(but don't put all your money as down payment) and enjoy the fact that you are building equity. You will never be more than temporarily debt-free anyway. Don't pay off the vehicles. Then you would just have 2 vehicles that are paid for and depreciating fast. You need some cash in the bank for an emergency also. Just my .02

Posted: 5/11/2002 10:07:55 PM EDT

[#15]

30,000 dollars?

- Chartered Lear Jet to Vegas
- High stakes BlackJack
- Hookers
- Booze

It would be an expensive weekend, but man, would you ever have a helluva post on here when you got back!

Posted: 5/11/2002 10:25:44 PM EDT

[#16]

Yeah, with interest rates so low, you're far better off paying off debt than investing the money in a low-yielding account. I think most money market funds are now paying less than inflation.

Posted: 5/11/2002 10:38:19 PM EDT

[#17]

Quoted:
Guys,

all good points, The idea of being debt free is really appealing. If I were to pay off the vehicles, that is exactly where I would be.

choices,
choices,
choices.....

View Quote

Dude, if you blow close to 30k "paying off" vehicles I'm gonna come over and [stick] you!!

Let the 30k EARN for you!

My old next door neighbor had a brand new Nissan Pathfinder than she paid close to $25k for. She got a settlement from a lawsuit and paid off the truck, her 25k Pathfinder 4-5 years later is worth about $4,000. She could have paid 25k to the principal of her house and been way better off. Don't sink money into something that drops value like a sinking stone.

Don't make me come over and [smash] you!!!!!

Posted: 5/12/2002 1:58:11 AM EDT

[#18]

Dude, how can $30k earn anything for the man right now? He said he doesn't want a house or any real estate I assume, so that leaves stocks, bonds, money accounts, precious metals, whatever. The smart thing to do would be to sell the cars, pay of the balance of the loans, and get a descent used car, paying cash. But if he's not going to do that, if he wants to keep the cars, perhaps it's better to pay off the loans while he has the money?

Posted: 5/12/2002 2:14:56 AM EDT

[#19]

I'm not going to give advice to someone else on what to do with their money, well not much, but I am going to say that a small return on investment is better than no return on investment.

Being debt free feels really good, but unless you are POSITIVE that you won't just bury yourself in debt again, why not just keep paying it off?

I dunno. I suppose if it were myself, I might think about talking to a financial planner, and see what they might suggest. In the mean time, I would probably just put the whole lump in a short term CD or something just so I had time to think about which way I would really end up ahead.

Just my opinion.

Posted: 5/12/2002 2:41:11 AM EDT

[#20]

Depends on what the interest rate is on the car loan. If it is more than you will make on the stock market, you might as well pay it off -- assuming the terms of the loan allow you to prepay without still having to pay the interest as well. (I've heard that car loans are often written so that you have to pay the total amount no matter how soon you pay them off. Never having had a loan for a car, I wouldn't know firsthand.)

If you hang on to it for investment, keep in mind that the stock market is still way overpriced compared to historical norms.

Also keep in mind that "financial planners" often try to steer you toward "investments" on which they get huge commissions. Annuities are a favorite scam.

IMHO your absolute best bet would be a house. Wait until autumn; prices should be dropping as interest rates go back up.

Posted: 5/12/2002 6:04:18 AM EDT

[#21]

You guys are great,

the pro's and con's are covering questions that I keep asking myself.

Buy property?

payoff cars?

invest in cd's?

gun collection? [:D]

cash in the bank?

gambling in Vegas? (not likely, I lived in Reno to long to believe gambling pays off)

keep it coming, you are making my brain work for once.....

thanks,

dave [:D]

Posted: 5/12/2002 7:38:44 AM EDT

[#22]

WHat 71 said. Cars depreciate fast and sucks your money in like a blackhole.

I would highly recommend against equity markets because very few people manage to pull a profit over the long term and it's way too easy to get sucked into a gambling mentality. (especially if you manage your own trades). Plus, most stocks don't have dividends and generate no cashflow while you hold them. So all gains have to come from selling them. This is also particularly risky since most stock prices are still way overpriced.

I agree with 71-hour, real estate is actually a pretty good investment, but just don't buy it now because housing prices are also abnormally high. It's a great way over the long term to build equity. Even if you don't want to settle down, having a house means that you have assets that can serve as a foundation for your future financial plans. If you move you can always rent it, and unlike stocks, it'd actually generate cashflow for you if you set everything up right.

Whatever you do, don't pay off the car debt with the money. Being debt free will only encourage you to take on more debt. This is how personal finance works, you buy something with borrowed money, now you have to find a way to generate the cashflow to service the debt payments. As long as they're balanced, you're fine.

Posted: 5/12/2002 11:58:45 AM EDT

[#23]

Definitely go with real estate. Look into tax lien sales/auctions. This info is usually available at you local county records office. Many times you can acquire a property for just the back taxes owed. Once you recieve the deed, sell it just under market value for a quick turn around. Start small, take your time, do some research. That 30k could set you for life. Foreclosures can be a good deal too. I wouldn't think about paying off the cars till you've doubled your money.

Go ahead and splurge a little, say $1500 on a new toy and ammo...get it out of your system. Plus it'll be a good start to your future gun collection.

Dan

Posted: 5/12/2002 11:11:23 PM EDT

[#24]

To answer the queestion, you have to state what the intrest rate on your cars is.

Those of you that say it is bad to pay off a debt, because it is depreciating. (you know who you are) What kind of advice are you giving?

If a car loan is 8% and any Money market or CD is around 4%, then, paying off the loan is netting you TWICE the profit that the investment gives. Plus, you dont have to pay capital gains tax.

What does the depreciation of the cars have to do with anything?
(unless of course you are proposing that thedave declare banruptcy, and clear his debt that way. In which case, he better buy 30 G's of something that hides real good)

Wolfpack, please respond: I'm afraid I missed something one of the times I cut out of Economics 101.

Dave, the call to buy a house, is good advice. Though the prices in my part of CO are horrible. You will save alot in taxes.

Posted: 5/12/2002 11:45:29 PM EDT

[#25]

Quoted:
invest in cd's?

gambling in Vegas? (not likely, I lived in Reno to long to believe gambling pays off)

View Quote

CDs are a terrible investment. Everyone is just converting them into MP3s, and then reselling the CDs. Even if you can get CDs at wholesale prices, you can't undersell the people with garage-sale mentalities.

Oh . . . the other sort? "Never mind."

Gambling can make you money. You just don't get to have any fun at it then. Not that I've ever figured out why people think it's fun to give their money to casinos. . . .

Posted: 5/13/2002 1:17:56 AM EDT

[#26]

Quoted:

I was seriously considering a range but after seeing that and indoor range with outdoor range would run about $1.2 million I decided that unless I could attract investors, it wouldn't happen.

View Quote

If you're interested in running a range, there's one for sale in Lakewood (at least I think it's still on the market). 50 and 100 yard, both indoors. It was once a pretty nice place to shoot, but the previous owners didn't maintain it very well. The 100 yard range needs some work, but the last time I shot there, the 50 yard (pistol) range was in good shape.

I can get details on the property if you want.

Posted: 5/13/2002 1:39:44 AM EDT

[#27]

Quoted:
If a car loan is 8% and any Money market or CD is around 4%, then, paying off the loan is netting you TWICE the profit that the investment gives. Plus, you dont have to pay capital gains tax.

View Quote

You're missing one other point. Profit from paying off debt is guaranteed whereas with investing you might lose your principal. The risk may be low, but it is still there.

I also still haven't figured out how vehicle depreciation affects your debt decisions. The vehicles' depreciation is not dependent on the status of the debt, making it a moot point.

When considering whether to pay off debt vs. spending the money elsewhere, consider the following sanity check. Ask yourself "If I didn't have the cash in hand, would I borrow the money from the bank, with my vehicles as collateral, to make this transaction." If the answer is no, reconsider; if the answer is yes, then go for it.

Posted: 5/13/2002 3:21:50 PM EDT

[#28]

thanks guy's

I am thinking right now that I might pay off 1 car, but I am not to strong on that even.

any more ideas?

thanks again

Posted: 5/13/2002 4:08:01 PM EDT

[#29]

If I were you I'd go to a bank and talk to one of their guys and see what they can do investment wise. See what the interest on CD's and whatnot are. The credit union I belong to, as far as I can tell the interest rates haven't changed. Interest rates at most banks probably aren't good but I'd rather it be making more interest in a CD or something for a few months as opposed to the normal rate given to savings accounts...

I'm not sure if they charge to talk to but talk to a financial planner (see if a friend can recommend one to you maybe) and see what he can do for you.

Think about your options both places give to you. If you still prefer to pay off all or most or some of your debts do that instead...or maybe use half for investing (possibly split it somehow where some is safe and some is volatile), some for fun and the rest to pay off debt...

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