Question: By the end of 2022, I will have made $350,000 before taxes as the sole breadwinner and head of household. This is a great starting point and I’m very aware how blessed we are to be in this position, but I’m always looking ahead on how to improve. I currently have $88K left in student loans (originally close to $150K) and very little credit card debt (less than $2K with more than $25K available). I have two auto loans totaling $170K for two electric vehicles at 5% interest.
I’ve recently been offered a $200K HELOC at 9%, which would help me bring down some of my monthly payments and do some small home repairs and improvements, but I want to make the right moves. And I’ve also been presented with a few long-term real estate investment opportunities that are rental properties out of state and are currently bringing it 10-12% ROI. But my biggest concern is that after taxes, 401(k) contributions, bills, savings and mortgage ($4,500), on paper I’m paycheck to paycheck. I’d like to use this HELOC to consolidate debt while also participating in some of these investment opportunities. I’m the first of my generation to own a home and the first to earn this much annually and don’t want to mess this up. How, specifically, can a financial adviser help me?
Dear Money Guy, should I borrow money (at a higher interest rate than my other debt) to spend more money?
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I don't think they know what paycheck to paycheck means. They just aren't carrying a savings balance? Their biggest mistake is all that car debt. You don't need 2 EVs in a household ever. Mortgage and student debt balances are fine. Their expenses listed aren't even close to consuming 350k/year though, even after taxes so whatever huge line item they're not mentioning is probably the important factor.
Mortgage: 4.5k*12=54k/y
College debt: 88k at unsubsidized rate and 15 year term = $830/m*12=10k/y
Cars: assuming 10 year loan at 5% gets you 1.8k/m*12=$22k/y
Total expenses listed=$86k/y
Wheres all that other money going?
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