I was two years into my first house and one year into a new financed truck. Being tired of making $500 a month payments and seeing how I could get a HELOC for a better rate, I used a portion of that money to pay off the truck. Essentially, took money from an asset that was appreciating and used it to pay down a liability that was depreciating. Hugely stupid. That added 30k to my mortgage.
In the end this didn’t hurt me much because I doubled my money on the house and I still own the truck, it’s 22 years old now. However, I will never do anything like that again.
This would be akin to paying down credit card debt by refinancing your house, but that would be even worse.
It’s experiences like this that have me on a debt free journey.
This one is a "make sure the juice is worth the squeeze" scenario...
5% home and 7% auto... no.
6% home and 25% credit card... hell yes.
And beware the "house/property is an asset" trap... if you have to put money into a thing to keep it, it's a liability. It can appreciate in value and Still be a liability.... if you lose your income and don't pay taxes, you can lose that "asset". Just a bad mental mindset to adopt. I know, it's contrary to what's commonly spewed forth... but so was standing up and criticizing the convid/vax bs. Engage your brain and think about it. Assets aren't threatened by loss of income.
anothergoatinthewall 2 points 2.0 years ago
This one is a "make sure the juice is worth the squeeze" scenario...
5% home and 7% auto... no.
6% home and 25% credit card... hell yes.
And beware the "house/property is an asset" trap... if you have to put money into a thing to keep it, it's a liability. It can appreciate in value and Still be a liability.... if you lose your income and don't pay taxes, you can lose that "asset". Just a bad mental mindset to adopt. I know, it's contrary to what's commonly spewed forth... but so was standing up and criticizing the convid/vax bs. Engage your brain and think about it. Assets aren't threatened by loss of income.