Thursday, July 7, 2011

Thinking Out Loud

Please feel free to skim right over this if it gets too hairy for ya. It's kinda confusing in my mind so I'm posting here to help me think through a potential transaction spurred on by Mortgaged Life and her use of equity lines vs. savings. Of course, if you want to offer your opinion I'll gladly listen.


HELOC - secured by our rental property (the old home). Total line of credit is $100,000. Current balance is $68,229 which was amortized on a 15-year 4.99% loan back in November, roughly 160 pmts. remaining.

Chase Card #2 - was a credit card that Chase refused to lower my 11 or 12% interest rate. So I paid it off by drawing on the line of credit. This part of the line was not amortized on the 15-year loan (above), and is a variable rate of prime minus 0.5% (currently 2.75%). Current balance on this portion is $4,327.

Love that I'm paying 2.75% instead of 12%. But because of my "bucket" mentality, it bugs me that I've mixed the rental loan with the credit card loan. Kinda like my kids hate for their foods to touch each other on the dinner plate I guess.

Word has it (and a homeowners' meeting confirmed) that we will be handed a rather hefty assessment for the rental property (condo) for a MAJOR retaining wall, underpining project. Basically one row of homes was practically sliding off the hill. And yes, when you own a condo you are responsible for everyone's property not just your own. It was really no big surprise....or at least I'm over the shock and prepared to write a check for $4-5K.

I actually have enough in the Rental Emergency Fund to cover that and still have 3 months of expenses (payment, taxes, HOA fees) left over.

So now I'm thinking I drain the Rental E-Fund ---- after all it is my money ---- and pay enough down on the line of credit to obliterate Chase Card #2.

Then when the bill comes in for the assessment, I draw on the line to pay the assessment.

Yes I know....I'll end up with basically the same amount of debt. But in my mind, then every dollar on that line of credit will really be related to the rental property. My bucket mentality sometimes makes my life alot more complicated than it has to be.....

And now that I've typed this out, I've realized I better wait and make sure I don't need to draw any more money on the line to pay for our dance team trip!!!

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