Built a new house and listed old house about a month before I was ready to move in. Timing worked out where I closed last week so now I am sitting on a chunk of change (380)

What do I do?

1)Put all proceeds towards new house (new house rate is 2.875% on 650)
2)Invest in the market (Find a dip and load the boat)
3)stash in HY savings
4)some kind of hybrid of these options

Jack Pearson said:

---

Built a new house and listed old house about a month before I was ready to move in. Timing worked out where I closed last week so now I am sitting on a chunk of change (380)

What do I do?

1)Put all proceeds towards new house (new house rate is 2.875% on 650)
2)Invest in the market (Find a dip and load the boat)
3)stash in HY savings
4)some kind of hybrid of these options

---

I did #1 and have a paid off house. This is not the most optimal solution given where mortgage rates were but I like not having a mortgage payment.

Given your low rate I'd vote for #4:

• Earmark 6-12 months of living expenses in cash and
• Slowly invest the rest of the cash on a biweekly or monthly basis over some pre-determined time frame (6 months, 2 years, or whatever you decide)

I know it doesn't provide the best return, but paying off all debt (especially mortgage) is the ultimate financial freedom for me. However, it doesn't appear to be enough to pay off the house. Due to that, I wouldn't put it towards the new house.

With the way the economy is going I also get being apprehensive in putting it into the stock market right now. Short term bonds would offer protection, but not much in returns. Would allow you to revisit frequently to use it toward real estate in the coming years if there were value buy opportunities.

My personal take is there will be a real estate recession, but not how most people think. Becuase of the skyrocketing interest rates, I don't see much value coming in big cities for primary residences. Maybe on the cheaper areas for investment properties.

Where I do think there is a high chance of the real estate bubble popping is in vacation towns. Covid and VRBO and the like have changed real estate. Lots and lots homes were purchased with monthly notes that are being financed by rental rates that require a high level of occupancy. If a decent recession comes, vacation rentals will likely suffer and potentially bankruptcies occur.

$380K is a nice chunk of change that could outright buy vacation properties that could offer good financial return in the future while offering use to your family when wanted.

Jet Black said:

---

Won't be popular but I'd pay the house down.

---

Sit on the cash, he can always use to pay mortgage down if necessary. Wait to see what happens over the next several months, there may be a stock buying opportunity that comes along once every fifteen to twenty years.

I'd keep at least a year of expenses in cash and then dollar cost average the rest into the market over the next 6 to 9 months. Even if the market continues to go down you will have enough cash you won't be forced to sell for a loss.

LostInLA07 said:

---

Jet Black said:

---

Won't be popular but I'd pay the house down.

---

No such thing in Texas because you still owe rent to the state every year (property taxes)

---

I think this is what they meant by the phrase, 'you will own nothing and like it.'

Its not that your property is going away, its that it can be taxed out of existence at any time.

Somebody could charge you with some sort of enviornmental violation on your property.

Maybe you emitting too much carbon. Maybe you emitting too much methane from the ground. Maybe a ditch with some oil in it. It doesn't matter.

Your property could be seized by at any time.

By the time you even make it in front of a judge, you out of business.

We saw it with covid.

The courts did absolutely nothing with covid.

All fundamental rights get thrown out the window.

Bottom line is,

Our private property ain't as ours as we think it is.

I bet we all know someone who lost land or property during the depression over and insignificant amount of money. Looking back at it now, it was uncontionable.

People lost farms a whole farms over $5. simply because they couldn't get credit or financing. It sounds impossible to us now.

But thats what is going to happen to us now.

Thats where we headed. And I think that's the reality of the situation.

It's gonna be a difficult decade.

We are going to see some crazy **** go down.

It's going to be disruptive. A huge amount of uncertainty out there in all industries.

What you think you can rely on, may not even be the case 6-months from now.

Anything could happen,

Laws have got to be consistent and predictable for the economy to function.

What made America great was stability and predictability.

Freedom to contract under a predictable set of laws and the ability to seek predictable relief in the courts.

The economy is going to devolve into chaos because of the unpredictability and uncertainty of laws.

This **** it about to devolve into chaos. I don't see how that doesn't happen.

So whether to dump a bunch of money into real estate. I don't know.

Whether to be holding cash ... in don't know that either.

Buy lotto tickets

I'm leaning towards holding cash as being the right thing to do.

You got a low interest rate, pay back with inflated dollars (so long as wages keep up with inflation).

Some how keep the cash to pay off your house squirreled away, Pay off the house when you can. But don't dump all your cash into a loan with a low interest rate.

Keep the cash liquid. You can't rely on being to sell your house if you need cash.

Better to have the cash to payoff house if needed. But not pre-pay the loan.

The downside is that a bunch of cash sitting around tends to get spent. People start to get ideas when theres that much cash sitting idle.

buy some I Bonds

Jack Pearson said:

---

Built a new house and listed old house about a month before I was ready to move in. Timing worked out where I closed last week so now I am sitting on a chunk of change (380)

What do I do?

1)Put all proceeds towards new house (new house rate is 2.875% on 650)
2)Invest in the market (Find a dip and load the boat)
3)stash in HY savings
4)some kind of hybrid of these options

---

Assuming you have long investing horizons, are financially solvent and you have access to money if you lose your job for 6 months during this upcoming recession.

1) Put 20% down on the new house. (-130k, 250k remaining)
2) Put 125k in oil stocks. Your biggest 2 year timeline winners will be oil. Pick two leaders from each of the following categories:
-Oil Sands in Canada
-Oil Shale in America
-Oil Supermajor
Do not pick a service company unless you've got insight into the market. Do not pick a midstream company unless you hate money. Do not pick an shipping contract MLP because the dividends look great.
3) Sit on the cash for a bit. Then buy some berkshire hathaway, defense companies, and then a little pit of NASDAQ 100 (QQQ) and S&P500 ETF (VOO or SPY).

Your other options include going over to the trading thread and learning how to day trade. Or buying a single rental home outright and start cash flowing.

one MEEN Ag said:

---

Jack Pearson said:

---

Built a new house and listed old house about a month before I was ready to move in. Timing worked out where I closed last week so now I am sitting on a chunk of change (380)

What do I do?

1)Put all proceeds towards new house (new house rate is 2.875% on 650)
2)Invest in the market (Find a dip and load the boat)
3)stash in HY savings
4)some kind of hybrid of these options

---

Assuming you have long investing horizons, are financially solvent and you have access to money if you lose your job for 6 months during this upcoming recession.

1) Put 20% down on the new house. (-130k, 250k remaining)
2) Put 125k in oil stocks. Your biggest 2 year timeline winners will be oil. Pick two leaders from each of the following categories:
-Oil Sands in Canada
-Oil Shale in America
-Oil Supermajor
Do not pick a service company unless you've got insight into the market. Do not pick a midstream company unless you hate money. Do not pick an shipping contract MLP because the dividends look great.
3) Sit on the cash for a bit. Then buy some berkshire hathaway, defense companies, and then a little pit of NASDAQ 100 (QQQ) and S&P500 ETF (VOO or SPY).

Your other options include going over to the trading thread and learning how to day trade. Or buying a single rental home outright and start cash flowing.

---

Are you saying 20% on the new house because of PMI?

To clarify my land equity (180k) was used as the downpayment so no PMI required.

2)Im in the oil industry and have a lot invested in oil already along with a bunch in the total stock market index and the S&P. But I agree with you next two years should be good for the oil patch if the overall market doesnt just tank. Even so a lot less downside.

3) Probably do not want to get into day trading with much but may play a little.

4)Thought about rentals, if the housing market crashes and there are some good buy on sale that may be the way to go.

LostInLA07 said:

---

Jet Black said:

---

Won't be popular but I'd pay the house down.

---

No such thing in Texas because you still owe rent to the state every year (property taxes)

---

Not always depending upon age and disability.
100% of houses that get foreclosed on have mortgages.
When it is paid off, it is a peaceful feeling.

Looking for the next dip to make a move, probably missed it this past week

Carlo4 said:

---

evestor1 said:

---

Do not pay off that mortgage rate.

---

I can't stress this enough. Also keep in mind you may need a rainy day fund in a few years (God forbid) due to the recession picking up steam. I know there is something to be debt free, but if your rate is lower than inflation, do the monthly payments. When the housing market tanks at some point soon, look to diversify and get a rental home when everyone is running to sell if that is of interest.


Edit for lesson learned. Back in 2008/2009, Ford stock hit $1.02 intraday trading right before the GM bailout. Instead of buying a few thousand shares with my savings, I wrote a check to Ford for $11,000 to become debt free. Fast forward to January 2011, and it was $17 a share.

Always be on the lookout for steals during down time as well.

---

I have a degree in econ with substantial finance coursework. I know all the formulas and models. I still (now, anyway) choose to go the way of a paid-off mortgage. My (rough) situation should clarify:

We're approximately 3-4 years from a free and clear house. At that point, our plan is to buy another one, rent this one, take the rental proceeds (probably $2-2.5K a month) and add that to approximately what we're paying now and get a decent, though not extravagant new(er) house. We'll stay there until I decide to retire, probably between 5-10 years beyond that.

At that point, we take a look at where we are. Do we keep paying the mortgage on the current house and stay? Do we sell, take the equity, and go smaller, likely paying cash or near cash and use the rental income to take care of most of our other monthly expenses? Or, in any worst case scenario, do we move back to the house we own now, use the equity we built up to make whatever repairs and just gut it out? Not likely because the rental income SHOULD way outpace the marginal cost of rental minus a mortgage on somewhere else, but its still an option if there are no other options. By the time we have that house paid off, I plan to have enough in savings/investments to cover real estate taxes into perpetuity, even if taxes raise whatever factor they've been increasing the last 2 decades. One of my IRAs should cover most of that, and leftover rental income for the first few years should finance the rest. The point here is that if everything goes OK, I shouldn't spend any money out of my monthly budget on real estate taxes and even insurance on the property I live in, regardless of whether I live in it or lease it out. And I have no plans to EVER sell it. Its a run of the mill house that is in a great location (i.e. great rental potential).

While you can't spend your equity, you have to live somewhere. The two balance each other out. And options are good. I don't know what mortgage qualification requirements for retirees are going to be in 20 years, so if I'm stuck without options, I don' t want to be in that situation. I realize under the other scenario I SHOULD be flush with cash, but the stock market recently showed us it could go down 20% in a matter of months. My house value has increased about 125% in the last 12 years without going down a single year. My investments haven't done that.

My parents lived until almost 90. One Grandfather until 95, the other 87. I need my money to be around and have some place to stay, even if it isn't a 5000 ft/sq. party palace with babes all around (I'll settle for 2500 shack with the babes).