Due to the delay, our family takes two weeks vacation in Florida this month instead of last month. We also make the annual visit to Disney World and Florida beach. Contrary to my worry, our net worth does not take a big hit due to this trip’s travel expenses.
Finally, we are mortgage-free! As hinted earlier, we decided to get a home equity loan at 1.99% for 5 years in order to pay off the mortgage. The total cost for the loan is only $300 (the price of the appraisal).
Also, since we own both of our vehicles outright we decided to convert one of the vehicle into cash. The bank evaluated that car to be $26,250 and let us borrow the full amount at a fixed-rate of 1.99% for 5 years. After our discussion we only took $24,500, enough to pay off the whole mortgage together with our home equity loan.
So now instead of paying the mortgage, we just have to pay the home equity loan and the auto loan for 5 years at an unbeatable rate of 1.99%. Our desire to pay off all debts is still there, but the urge to eliminate them all asap has been lessen due to the extreme low rate. We decide to invest the extra while paying the minimum as we think we can earn more than 1.99% on the investment return in the long run.
As a result, I have opened a Spousal Roth IRA for my stay-at-home wife for the first time. We will use the extra money to invest with the hope of earning more than 1.99% in the long run. Of course, we still plan to pour any extra money toward the low-rate debts if we run out of tax-advantaged space in our investment portfolio.
The Cars’ Value is derived from the two following data points:
Toyota Camry: $11,560 (Lowest estimate from KKB raning from $13,960 to $11,560)
Toyota FJ Cruiser: $24,500 (Same as loan balance from auto refinance)