Financial advice needed and what do I ask at first site meeting?

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C

ckinchen

Well-known member
Mar 1, 2019
258
Orlando, FL
Pool Size
10200
Surface
Plaster
Chlorine
Salt Water Generator
SWG Type
Pentair Intellichlor IC-40
Hi! So we finally have our presite visit this week, hopefully digging starts soon! Is there a list of questions I should be asking?
Also are there any financially savvy folks out there? I have a home equity loan and savings. I know I can write off the interest from my heloc which is 3%. So is it smarter to use savings first or best to put everything on heloc and pay off in a few months with savings? Not sure if that will make any difference since only a few months of balance will be in heloc. Or just best to use heloc once done with what I have in savings. In the end I will have a heloc balance regardless.
Thanks!
 
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ckinchen said:
Hi! So we finally have our presite visit this week, hopefully digging starts soon! Is there a list of questions I should be asking?
Also are there any financially savvy folks out there? I have a home equity loan and savings. I know I can write off the interest from my heloc which is 3%. So is it smarter to use savings first or best to put everything on heloc and pay off in a few months with savings? Not sure if that will make any difference since only a few months of balance will be in heloc. Or just best to use heloc once done with what I have in savings. In the end I will have a heloc balance regardless.
Thanks!
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One thing we found out too late... If you take money from retirement savings (assuming you are over 59 1/2 and don't have a penalty) in addition to the taxes you'll pay, your income will be greatly increased in terms of Medicare costs. We built our pool and a big boat garage/shop in 2018/2019, paying for it mostly with retirement savings rather than a loan. Then my husband retired and went on Medicare this year. OUCH! His payments are more than double what they would have been due to our high "income" in 2018/2019. With interest rates so low, we now know that for big ticket items it's better to take out a loan and pay it off over time, rather than take a chunk from a tax-deferred savings account.
 
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Make sure to completely compare your options with the interest / tax penalties/ increased Medicare costs / etc side by side so it’s truly an apples to apples comparison. $400 a month in increased medical costs seems outrageous ($4800 a year) but not if you were going to pay $9k in interest the first year of the loan. Even if the interest is deductible and you get a $3k income tax credit, it’s still $4800 to $6000 respectively and the increased medical is the better deal. If it goes on for multiple years it can make even more of a difference. I’m just throwing numbers out for an example, but what often seems like a better deal might not be.
 
sktn77a said:
Given interest rates on savings right now and for the foreseeable future, I wouldn't take out a loan at 3%. Heck I'll lend you the money at 2.5%

:)
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This. Don’t let the tax deductibility of a HELOC confuse the issue. Yes, that knocks the 3% down by your marginal tax rate, but you have to PAY taxes on the money you earn in interest. The interest you are earning on your savings is also knocked down by the same rate. So...you can ignore taxes when comparing the HELOC rate vs your savings rate.

The highest interest rate I‘ve seen right now for an online savings account is .6%. That is waaaay lower than 3%. So if we are just talking about what is “cheaper”, taking it out of savings is the clear winner.

The other consideration is how much savings do you have? Would this deplete it by 90%? 5%? If by 90%, then it might be worth using the HELOC even though it is more expensive. If only by 5%, seems like using savings is the way to go. Somewhere in between? You’ll have to decide.

Hope this was helpful.
 
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@jimbethesda
So I have always had a savings account connected to my checking and I never looked at the rate, just kept putting anything extra there to help me save up. But just checked and its .01%..which is why I have never paid taxes on it because there really isn't much to report! So I probably should have taken that into consideration years ago and found a better savings account rate. I think in the end it will be 50%Heloc and 50% savings without clearing too much out of savings but a good portion. So regardless I will pay interest on a portion of it on Heloc. Ok thank you for breaking it all down, and yes very helpful!
 
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ckinchen said:
@jimbethesda
So I have always had a savings account connected to my checking and I never looked at the rate, just kept putting anything extra there to help me save up. But just checked and its .01%..which is why I have never paid taxes on it because there really isn't much to report! So I probably should have taken that into consideration years ago and found a better savings account rate. I think in the end it will be 50%Heloc and 50% savings without clearing too much out of savings but a good portion. So regardless I will pay interest on a portion of it on Heloc. Ok thank you for breaking it all down, and yes very helpful!
Click to expand...
Sounds like a good plan. Best of luck.
 
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